Mark And Julie Daviscourt v. Quality Loan Services ( 2017 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
MARK AND JULIE DAVISCOURT,
a husband and wife and their marital No. 74979-0-1
community,
DIVISION ONE
Appellants,
UNPUBLISHED OPINION
V. CO.cz
Cza
QUALITY LOAN SERVICESt
CORPORATION OF WASHINGTON,
a Washington Corporation,
Respondent,
MCCARTHY HOLTHUS, LLP, a
California Limited Liability Partnership;
BANK OF AMERICA, N.A., a national
association,
Defendants,
SELECT PORTFOLIO SERVICING,
INC., a foreign corporation; BANK OF
NEW YORK MELLON FKA BANK OF
NEW YORK, a national association;
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.,
a foreign corporation; MERSCORP
HOLDINGS, INC., a foreign corporation;
ALTERNATIVE LOAN TRUST
2005-62, MORTGAGE PASS-
THROUGH CERTIFICATS SERIES
2005-62; JOHN DOES 1-99, FILED: August 21, 2017
Respondents.
TRICKEY, A.C.J. — Mark and Julie Daviscourt appeal the dismissal, on
summary judgment, of their negligence, outrage, and civil conspiracy claims
against various defendants who initiated a nonjudicial foreclosure proceeding
against them after they defaulted on their loan. Underlying most of the
t It appears the case caption's reference to "Quality Loan Services Corporation of
Washington" is a typographical error. All other references in the record refer to "Quality
Loan Service Corporation of Washington."
No. 74979-0-1 /2
Daviscourts' claims are their assertions that the defendants recorded documents,
including a deed of trust and promissory note, containing false information about
the identities of the lender, beneficiary, and trustee, and that Quality Loan Service
Corporation of Washington (Quality) failed to maintain a physical address.
Because the Daviscourts have failed to establish that the defendants violated any
duty to them when they recorded the documents, that the defendants employed
unlawful means, and that the defendants' conduct was outrageous, we affirm.
The Daviscourts also claim that the defendants violated the Consumer
Protection Act, chapter 19.86 RCW (CPA), by violating the deeds of trust act,
chapter 61.24 RCW (DTA). Because the Daviscourts have not shown that any
violation by Quality constituted an unfair or deceptive practice, or that any of the
other defendants violated the DTA, we also affirm the dismissal of their CPA
claims.
FACTS
In 2005, the Daviscourts executed a promissory note in the amount of
$875,000 in favor of America's Wholesale Lender(AWL). They secured the note
with a deed of trust encumbering their home. The deed of trust identified AWL as
the lender, and stated that the lender was a corporation under the laws of New
York. The deed of trust identified Transnation as the trustee and Mortgage
Electronic Registration Systems, Inc.(MERS)as the beneficiary. The deed of trust
also contained an instruction to return the document to Countrywide Home Loans
(Countrywide) after recording.
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No. 74979-0-1 / 3
In 2009, the Daviscourts sued Countrywide and other defendants on other
grounds related to a loan modification. The lawsuit identified Countrywide as the
lender for the 2005 loan.
In September 2011, MERS purported to assign its beneficial interest in the
deed of trust to the Bank of New York Mellon f/k/a Bank of New York (BONY).
In September 2013, BONY, acting as beneficiary, recorded an appointment
of successor trustee, appointing Quality as the trustee. An officer of Select
Portfolio Servicing, Inc. (SPS), acting as attorney in fact for BONY, signed the
appointment. The appointment listed an address in Poulsbo, Washington, for
Quality.
Also in September 2013, Quality sent the Daviscourts a notice of default
(NOD). The NOD identified SPS as the loan servicer, and BONY as the owner of
the note. It was signed by Quality as the trustee. The NOD listed the same
Poulsbo, Washington, address for Quality as the appointment had.
Around that time, the Daviscourts attempted to modify their loan with SPS.
Mark Daviscourt included letters of hardship with his requests to modify the loan.
A sample letter, from his physician, addressed "To Whom It May Concern" and
dated January 23,2007, explained that Mark suffered from depression and that
his "coping skills and executive functioning decline rapidly when under stress, or
exposed to situational changes."' The letters warned that "a seizure of [Mark's]
home would likely have a significantly adverse affect [sic] on [Mark's] future
medical condition."2 Mark sent the same letters to Quality.
'Clerk's Papers(CP) at 307.
2 CP at 307.
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No. 74979-0-I /4
Receiving the NOD distressed Mark. Mark decided to commit suicide
because he felt that the shame of losing his home was unbearable. Concerned
about the pain his death would cause his family, he did not follow through with the
plan.
In February 2014, Quality sent the Daviscourts a notice of trustee's sale
because they had defaulted on their obligation. The notice listed a physical
address for Quality in Seattle, Washington. Mark made several attempts to visit
Quality at its Seattle office but, although locating the building and seeing a sign for
Quality, was not able to enter the office or reach anyone through the call box.
Following his unsuccessful visits to Quality, Mark again considered suicide.
In March 2014, Quality discontinued the sale.
In July 2014,the Daviscourts sued MERS, BONY,SPS, Quality, and others
for negligence, outrage, civil conspiracy, and violation of the CPA. In late
December 2015, the court granted Quality's motion for summary judgment. In
March 2016, the court granted summary judgment in favor of the remaining
defendants (the SPS defendants) and dismissed the Daviscourts' remaining
claims.
The Daviscourts appeal.
ANALYSIS
Summary Judgment
Summary judgment is appropriate "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is
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No. 74979-0-1/ 5
entitled to a judgment as a matter of law." CR 56(c). The affidavits "shall set forth
such facts as would be admissible in evidence." CR 56(e). Because witnesses'
opinions on legal issues are not admissible, neither a trial court nor an appellate
court may consider them when deciding whether to grant summary judgment. King
County Fire Prot. Dists. v. Hous. Auth. of King County, 123 Wash. 2d 819, 826, 872
P.2d 516(1994).
The court must consider the facts and all reasonable inferences from those
facts in the light mostfavorable to the nonmoving party. Keck v. Collins, 184 Wash. 2d
358, 370, 357 P.3d 1080 (2015). Appellate courts review summary judgment
decisions de novo. Keck, 184 Wash. 2d at 370.
Throughout their brief, the Daviscourts rely on the affidavit of their expert
witness, Marie McDonnell, as proof that various recorded documents are false or
void or that various defendants lacked legal authority to take certain actions. The
Daviscourts note that neither McDonnell's "expertise nor opinions based upon
findings were challenged in the trial court."3 The defendants argue that the trial
court properly disregarded McDOnnell's legal conclusions. We agree with the
defendants and disregard all of McDonell's legal conclusions.
Negligence
The Daviscourts argue that the trial court erred by dismissing their
negligence claims on summary judgment because there were at least genuine
issues of material fact for each element of their claims. We disagree because the
Daviscourts have not shown that the defendants had a duty to protect them from
3 Appellants' Opening Br. at 10.
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No. 74979-0-1 /6
the type of harm alleged.
The tort of negligence has four elements: duty, breach, causation, and
damages. Schooley v. Pinch's Deli Mkt., Inc., 134 Wn.2d 468,474, 951 P.2d 749
(1998). "The existence of a duty may be predicated upon statutory provisions or
on common law principles." Degel v. Majestic Mobile Manor, Inc., 129 Wash. 2d 43,
49, 914 P.2d 728 (1996). Under the common law, actors "have a duty to exercise
reasonable care to avoid the foreseeable consequences of their acts." Washburn
v. City of Federal Way, 178 Wash. 2d 732, 757, 310 P.3d 1275 (2013) (citing
RESTATEMENT(SECOND)OF TORTS§281 cmts. C, d (1965)). Actors must also "avoid
exposing another to harm from the foreseeable conduct of a third party."
Washburn, 178 Wash. 2d at 757 (citing RESTATEMENT § 302). "The existence of a
legal duty is a question of law for the court," but the scope of a duty is ordinarily a
question for the trier of fact. McKown v. Simon Prop. Grp., Inc., 182 Wash. 2d 752,
762, 344 P.3d 661 (2015).
Here, the Daviscourts argue that the defendants have a duty not to record
false documents. The Daviscourts cite a warning in Werner v. Werner, that
corruption of the title registration system could cause "substantial economic loss
to the parties involved." 84 Wash. 2d 360, 367,526 P.2d 370(1974). They also point
out that, in Meyers v. Meyers, the court held that a notary who negligently
performed her duties could be liable in tort. 81 Wash. 2d 533, 534-36, 503 P.2d 59
(1972).
But, in both Werner and Meyers, the court was addressing the liability of
notaries for allegedly negligently performing specific statutorily-prescribed duties.
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No. 74979-0-1/ 7
Werner,84 Wn.2d at 361, 368-69(applying California law to determine the notary's
duties and liability and also holding that Washington could exercise personal
jurisdiction over a non-resident notary); Meyers, 81 Wash. 2d at 535-36 (citing former
RCW 64.08.050 (1987)). In both cases, the defendant notaries acknowledged
deeds signed by people who were not who they claimed to be. Werner, 84 Wash. 2d
at 361; Meyers, 81 Wn.2d. at 534-35. And, in both cases, the forged deeds were
used to convey the property away from the real owners. Werner,84 Wn.2d at 362;
Meyers, 81 Wn.2d. at 534-35. In those cases, it is easy to see why the notaries
would owe their statutory duties to the property owners' whose identities they had
allegedly failed to confirm.
By contrast, the Daviscourts have not shown why the defendants owe their
duty to not record false information specifically to them. The traditional purpose of
a recording statute is to protect subsequent purchasers from secret conveyances
and encumbrances. See 18 WASHINGTON PRACTICE REAL ESTATE: TRANSACTIONS
§ 14.5, at 126-27 (2d ed. 2004 & Supp. 2017); 1 JOYCE PALOMAR, PArroN AND
PALOMAR ON LAND TITLES § 12, at 57-58 (3d ed. 2003). Therefore, it is more likely
that the duty stemming from recording documents would be owed to subsequent
purchasers, not the original parties to a transaction, like the Daviscourts.
It is also clear from the Daviscourts' theory of negligence that the recording
of documents is only tangentially related to their claim. All the injuries the
Daviscourts suffered were at the hands of Quality, for allegedly failing to maintain
its physical location,4 or Countrywide, for listing AWL as a New York corporation
4 The Daviscourts did not argue that Quality was negligent for failing to maintain its
physical location in their opening brief.
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No. 74979-0-1 /8
on the note and deed of trust, even though it, allegedly, did not exist.5 The
Daviscourts argue that recording documents containing false statements caused
confusion, which Mark believed he had to visit Quality in person in order to dispel.
Mark's attempts to find Quality's physical location were unsuccessful and
traumatic, causing him great emotional distress. And Mark's apparent need to
clear up the confusion also led to the discovery that AWL did not exist in 2005,
which caused him to have a psychological breakdown.
The Daviscourts have not shown that a duty exists under these
circumstances.6 Thus, the trial court did not err by granting the defendants'
motions for summary judgment on the Daviscourts' negligence claims.
Outrage
The Daviscourts argue that the defendants acted outrageously by pursuing
5 In his declaration, Mark claims that several documents provided by SPS appeared
forged. The Daviscourts repeat this claim in the facts section of their opening brief. This
alleged forgery also caused him distress. It does not appear that the Daviscourts'
negligence claim includes any alleged forgery.
Regardless, the Daviscourts would have had to specifically plead any allegation of
forgery in their complaint. RCW 62A.3-308(a). The SPS defendants argued in their reply
in support of their motion for summary judgment that the Daviscourts had not satisfied that
pleading standard. As appellants, the Daviscourts have the burden of providing a record
sufficient for review. See Story v. Shelter Bay Co., 52 Wash. App. 334, 345, 760 P.2d 368
(1988). They do not appear to have designated the complaint for review.
6 In their reply brief, the Daviscourts assert that they can "bootstrap their contentions that
[the defendants] violated" several specific "statutes into their assertions of negligence."
Appellants' Reply Br. at 8. We do not consider this argument or any new theories of
negligence the Daviscourts raised in their reply brief, because they were raised too late.
See Cowiche Canyon Conservancy v. Bosley, 118 Wash. 2d 801, 809,828 P.2d 549(1992).
7 Relying on Vawter v. Quality Loan Service Corp. of Washington, the SPS defendants
argue that the Daviscourts' outrage claim is barred by the economic loss rule. 707 F.
Supp. 2d 1115, 1128 (W.D. Wash. 2010). But Washington has replaced the "economic
loss rule" with the "independent duty doctrine," and the defendants do not offer any
argument to show that the Daviscourts' outrage claim would be barred under the
independent duty doctrine. See Hendrickson v. Tender Care Animal Hosp. Corp., 176
Wash. App. 757, 768-71, 312 P.3d 52(2013).
8
No. 74979-0-1 /9
a nonjudicial foreclosure based on an "arguably void deed oftrust" when they knew
that Mark was particularly susceptible to emotional distress.8 The Daviscourts also
argue that the defendants' recording of documents containing falsities, Quality's
failure to maintain a physical location, and Quality's discontinuance of the trustee's
sale without notice to the Daviscourts all constitute outrageous and extreme
conduct. We disagree.
"The tort of outrage requires the proof of three elements:(1) extreme and
outrageous conduct,(2) intentional or reckless infliction of emotional distress, and
(3) actual result to plaintiff of severe emotional distress." Kloepfel v. Bokor, 149
Wash. 2d 192, 195,66 P.3d 630(2003). The "first element of the test goes to the jury
only after the court 'determine[s] if reasonable minds could differ on whether the
conduct was sufficiently extreme to result in liability." Robel v. Roundup Corp.,
148 Wash. 2d 35, 51, 59 P.3d 611 (2002)(alteration in original)(quoting Dicomes v.
State, 113 Wash. 2d 612, 630, 782 P.2d 1002 (1989)). "Liability exists 'only where
the conduct has been so outrageous in character, and so extreme in degree, as to
go beyond all possible bounds of decency, and to be regarded as atrocious, and
utterly intolerable in a civilized community." Grimsby v. Samson, 85 Wash. 2d 52,
59, 530 P.2d 291 (1975) (emphasis omitted) (quoting RESTATEMENT (SECOND)
TORTS § 46, cmt. d).
Void Deed of Trust and Note
We address first the Daviscourts' argument that the defendants' conduct
was outrageous because the defendants attempted to nonjudicially foreclose on
8 Appellants' Opening Br. at 26.
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No. 74979-0-1 / 10
the Daviscourts' house based on a deed of trust and note that were "arguably" or
"potentially" void.9 The Daviscourts allege that the note and deed of trust are void
because both documents listed AWL as the lender and AWL did not exist in 2005.
Because AWL was a known trade name for Countrywide, we disagree.
AWL is Countrywide's assumed business name. Dawson v. Bank of New
York Mellon, 3:16-CV-01427-HZ, 2016 WL 7217626, at *3(D. Or. Dec. 13, 2016)
(holding several courts have concluded that "the fact that AWL is Countrywide's
assumed business name cannot be disputed"); see also Tvshkevich v. Wells Fargo
Bank N.A., 215CV2010JAMACPS,2016 WL 193666, at *9-10 (E.D. Cal. Jan. 15,
2016), report and recommendation adopted,2016 WL 1162687(E.D. Cal. Mar. 24,
2016).
As the Daviscourts point out, the defendants have not proved that AWL was
Countrywide's "legitimate trade name in Washington" in 2005.19 But, even if
Countrywide failed to register AWL as a trade name, it does not follow that the
deed of trust or promissory note are void or that the documents contained falsities.
A person's failure to register the trade name prevents the person from being able
to file a lawsuit in the assumed name, but does not "impair the validity of any
contract or act of such person or persons and shall not prevent such person or
persons from defending any suit." RCW 19.80.040. Moreover, the Daviscourts'
lawsuit against Countrywide in 2009 suggests they were aware of AWL's status as
Countrywide's assumed business name long before the events giving rise to their
current lawsuit occurred.
9 Appellants' Opening Br. at 26.
'° Appellants' Reply Br. at 5 n.5.
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No. 74979-0-1/ 11
Accordingly, we reject the Daviscourts' argument that the defendants
behaved outrageously by pursuing a nonjudicial foreclosure. Similarly, we reject
any of the Daviscourts' other arguments that rely on their allegation that the
recorded documents contained false information because they listed AWL as the
original lender.
Falsities
It is not clear exactly which false statements the Daviscourts are referring
to at this point, but we assume the Daviscourts are referring to (1)statements that
AWL, rather than Countrywide, was the original lender;(2) statements that MERS
is or was a beneficiary; and (3) statements that MERS assigned its interest to
BONY.
(1) AWL & Countrywide
As discussed above, it was notfalse to list AWL as the original lender. Thus,
none of the defendants behaved outrageously by recording documents that listed
AWL as the lender.
(2) MERS as Beneficiary
Under Bain v. Metropolitan Mortgage Group, Inc., MERS is not the
beneficiary of a deed of trust when it does not have physical possession of the
promissory note. See 175 Wash. 2d 83, 99, 285 P.3d 34 (2012). Characterizing
MERS as the beneficiary has the capacity to deceive. Bain, 175 Wash. 2d at 117.
But, absent a showing that this characterization caused damages, the
characterization of MERS as the beneficiary is immaterial. Bavand v. OneWest
Bank,-196 Wn. App. 813, 843,385 P.3d 233(2016).
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No. 74979-0-1 / 12
Here, in 2005, the parties executed the deed of trust, designating MERS as
the beneficiary. In 2011, MERS purported to assign its interest to BONY. Given
that these events occurred before the Supreme Court's 2012 decision in Bain, and
that, even now, the fact that MERS is designated as a beneficiary is usually
immaterial, we conclude that it was not outrageous for the parties to record or
serve documents stating that MERS is a beneficiary.
(3) BONY as Beneficiary '
It was not outrageous for any of the parties to list BONY as the beneficiary
on documents or record a document on behalf of BONY purporting to appoint
Quality as a trustee, because those statements are not false. BONY is the
beneficiary because it is the holder of the note and the deed of trust follows the
note.
The Daviscourts have two main objections to the defendants' argument that
BONY is the beneficiary because it holds the note. First, they argue that the note
is not a negotiable instrument because it is subject to negative amortization. It
appears that the Daviscourts are arguing that, because the note was not a
negotiable instrument it fell outside the Uniform Commercial Code, Title 62A RCW
(UCC), and, therefore, BONY would need to be able to demonstrate valid
assignments and a chain of title in order to enforce the note.
The beneficiary is "the holder of the instrument or document evidencing the
obligations secured by the deed of trust, excluding persons holding the same as
security for a different obligation." RCW 61.24.005(2). "Under the UCC, the
'holder' of the note is '[t]he person in possession of a negotiable instrument that is
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No. 74979-0-1 / 13
payable either to bearer or to an identified person that is the person in possession."
Bucci v. Nw. Tr. Servs., Inc., 197 Wash. App. 318, 328, 387 P.3d 1139 (2016)
(alteration in original) (quoting RCW 62A.1-201(b)(21)(A)), review denied, 188
Wash. 2d 1012, 394 P.3d 1011 (2017). A negotiable instrument is "an unconditional
promise or order to pay a fixed amount of money, with or without interest or other
charges described in the promise or order." RCW 62A.3-104(a). "[N]egotiability
exists if the fixed amount can be determined from the face of the instrument, except
for amounts of interest,for which reference to information not contained in the note
is allowable." Bucci, 197 Wash. App. at 330.
Here, the Daviscourts argue that their note is not a negotiable instrument
because the possibility of negative amortization means that the principal amount
is subject to change." This court recently rejected an argument identical to the
Daviscourts' in Bucci v. Northwest Trustee Services. 197 Wash. App. at 328-32.
There, the court held that, despite the possibility of negative amortization, the note
was a negotiable instrument under the UCC. Bucci 197 Wash. App. at 331-32.
Bucci controls. The note is a negotiable instrument. Therefore, BONY is the holder
of the note.
Second, they argue that BONY cannot be the beneficiary because the
defendants failed to prove that BONY was not holding the note as security for a
different obligation. The Daviscourts argue that there is at least a material question
of fact for this issue. We disagree. BONY's declaration of ownership is evidence
that BONY is not holding the note to secure some other obligation because the
'I Although the note identifies a fixed principal amount of $875,000, that principal changes
if the Daviscourts' monthly payment is less than the interest that has accrued that month.
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No. 74979-0-1 /14
note indicates that BONY is the beneficiary, and that, as beneficiary, BONY
understands that the trustee will rely on the declaration in order to initiate a
trustee's sale. If BONY were holding the note as security for another obligation, it
could not call itself as the beneficiary.
The Daviscourts argue that the defendants' admission that BONY holds the
note as trustee for a securitized trust means that BONY is holding the note as
securitjt for a different obligation. They ask how the court can "know that the
separate obligation owed by the trustee to investors does not involve
rehypothecation unless the purported beneficiary provides some evidence
addressing this fact."12 We reject both of these arguments because they are
purely speculative. The Daviscourts' have not offered any actual evidence to
contradict BONY's declaration that it is the beneficiary.
In sum, BONY is the beneficiary. Therefore, it was not outrageous for any
of the defendants to record or serve documents that stated or relied on the fact
that BONY is the beneficiary, including documents by which BONY appointed
Quality as its trustee.
Quality's Physical Location & Failure to Notify the Daviscourts
Finally, the Daviscourts argue that two specific acts by Quality were
outrageous:(1) failing to maintain a physical address, and (2) failing to notify the
Daviscourts that it had discontinued the trustee's sale. First, all of Mark's attempts
to visit Quality's physical location in Seattle occurred in March 2014. The failure
to maintain a physical office for one month is not outrageous or extreme. Second,
12 Appellants' Opening Br. at 43.
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No. 74979-0-1/15
Mark does not cite any authority requiring the trustee to inform the borrower that it
is discontinuing the trustee's sale. Mark's opinion that "Quality stopped the sale
without telling [him] in order to taunt [him] and cause [him] injury" is just that, an
opinion.13 He does not offer any evidence that Quality's conduct was outside the
bounds of decency. Even assuming Quality was aware that Mark was "peculiarly
susceptible to emotional distress," none of its acts were outrageous enough to
warrant liability.14
Accordingly, the trial court did not err by granting the defendants' motions
for summary judgment on the Daviscourts' outrage claims.
Civil Conspiracy
The Daviscourts argue that the trial court erred by granting the defendants'
motions for summary judgment on their civil conspiracy claims because the
defendants' conspired to accomplish a lawful purpose, foreclosing on the deed of
trust, through unlawful means, specifically, illegally recording false documents.
The Daviscourts argue that, by recording the documents containing false
statements, the defendants violated two criminal laws. We disagree because the
Daviscourts have not shown that the defendants' conduct violated either statute.
"[A]n actionable civil conspiracy exists if two or more persons ... combine
to accomplish some purpose not in itself unlawful by unlawful means." Corbit v. J.
I. Case Co., 70 Wash. 2d 522, 528,424 P.2d 290 (1967).
The Daviscourts argue that the defendants attempted to nonjudicially
foreclose by unlawfully filing documents containing false statements. They rely on
13 CP at 256.
14 Appellants' Opening Br. at 27.
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No. 74979-0-1 / 16
two criminal statutes to support their claim that the defendants' conduct was
unlawful: RCW 9.38.020 and RCW 40.16.030. Even assuming that the defendants
recorded documents containing some false information, the Daviscourts have not
produced evidence that the defendants' acts violated either statute.
First, under RCW 9.38.020, "[e]very person who shall maliciously or
fraudulently execute or file for record any instrument, or put forward any claim, by
which the right or title of another to any real or personal property is, or purports to
be transferred, encumbered or clouded, shall be guilty of a gross misdemeanor."
The Daviscourts make no attempt to show that the defendants acted
maliciously or fraudulently. Because the Daviscourts do not show that the
defendants had the necessary mens rea, they have not shown that the defendants
violated this statute.
Second, under RCW 40.16.030, "[e]very person who shall knowingly
procure or offer any false or forged instrument to be filed, registered, or recorded
in any public office, which instrument, if genuine, might be filed, registered or
recorded in such office under any law of this state or of the United States, is guilty
of a class C felony."
In State v. Price, the court had to decide whether a "steelhead receiving
ticket" was an instrument for purposes of RCW 40.16.030. 94 Wash. 2d 810, 817-19,
620 P.2d 994 (1980). The court determined that the legislature intended
"instrument" to encompass a document,
which is required or permitted by statute or valid regulation to be filed,
registered, or recorded in a public office if (1) the claimed falsity
relates to a material fact represented in the instrument; and (2a)the
information contained in the document is of such a nature that the
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No. 74979-0-1 / 17
government is required or permitted by law, statute or valid regulation
to act in reliance thereon; or (2b) the information contained in the
document materially affects significant rights or duties of third
persons, when this effect is reasonably contemplated by the express
or implied intent of the statute or valid regulation which requires the
filing, registration, or recording of the document.
Price, 94 Wash. 2d at 819. The Supreme Court has affirmed the use of this test.
State v. Hampton, 143 Wash. 2d 789, 793-94, 24 P.3d 1035 (2001).
The Daviscourts have not shown that the documents at issue in this case
are "instruments" within the meaning of the statute because they have not shown
that any of the falsities are material or materially affect the Daviscourts' rights: As
explained above, it was not false to say that AWL was the lender, that BONY was
the beneficiary, or that BONY appointed Quality as a successor trustee. There
remains an argument, at least, that the identification of MERS as the original
beneficiary was false. But that designation was immateria1.15
Accordingly, the Daviscourts have not shown that any of the defendants
employed or conspired to employ any unlawful means to accomplish their goal of
enforcing the nonjudicial foreclosure. The trial court did not err by granting the
defendants' motions for summary judgment on the civil conspiracy claim.
15 Relying on State v. Sanders, the Daviscourts argue that the statute does not require the
falsity to be material. 86 Wash. App. 466, 470, 937 P.2d 193(1997). In Sanders, Division
Two of the Court of Appeals held that the State did not have to prove that a forged child
support order "was 'materially false' in order to establish a violation of RCW 40.16.030."
86 Wash. App. at 470. But that case did not examine whether the forged child support order
was an instrument. Sanders, 86 Wash. App. at 470.
Two interpretations of Sanders are possible. First, it is holding that materiality is
not relevant to whether a document is an instrument for purposes of the statute. In that
case, it would conflict with Hampton and Price, and would not be good law. Second, it
applies only to cases where there is no question that the document at issue is an
instrument. Either way, it is not controlling here.
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No. 74979-0-1/ 18
Consumer Protection Act
The Daviscourts argue that the SPS defendants violated the CPA, because
SPS, not BONY, appointed Quality as trustee, in violation of the DTA. Because
SPS was acting as BONY's agent, we disagree.
The Daviscourts argue that Quality violated the CPA because it violated the
DTA when it failed to maintain a physical address, ignored problems with its
appointment as trustee, and failed to notify the Daviscourts that it had cancelled
the trustee's sale. We conclude that none of Quality's actions were violations of
the CPA because none constituted an unfair or deceptive act.
The CPA forbids unfair competition and unfair or deceptive acts. "Unfair
methods of competition and unfair or deceptive acts or practices in the conduct of
any trade or commerce are hereby declared unlawful." RCW 19.86.020. The
Supreme Court identified five elements for a private cause of action for violation of
the CPA: "(1) unfair or deceptive act or practice; (2) occurring in trade or
commerce;(3) public interest impact;(4) injury to plaintiff in his or her business or
property;(5)causation." Hangman Ridge Training Stables, Inc. v. Safeco Title Ins.
Co. 105 Wash. 2d 778, 780, 719 P.2d 531 (1986).
Unfair or Deceptive Acts — SPS Defendants
The Daviscourts allege that the SPS defendants violated RCW
61.24.010(2) and RCW 61.24.030(7) when SPS appointed Quality as a trustee,
even though BONY was the beneficiary of the deed of trust.
Under RCW 61.24.030(7), the trustee must have proof that the beneficiary
is the owner of the promissory note secured by the deed of trust before it may
18
No. 74979-0-1 /19
record notice of the trustee's sale. "A declaration by the beneficiary made under
the penalty of perjury stating that the beneficiary is the actual holder of the
promissory note or other obligation secured by the deed of trust shall be sufficient
proof as required under this subsection." RCW 61.24.030(7)(a).
The Daviscourts argue that only a beneficiary, not an agent of the
beneficiary, may make that declaration. They are mistaken. An agent may make
the declaration and act on behalf of the beneficiary in DTA proceedings, so song
as the agent identifies the principal whose control it is under. See Rucker v.
Novastar Morta., Inc., 177 Wash. App. 1, 15, 311 P.3d 31(2013)(quoting Bain, 175
Wash. 2d at 107).
Here, the declaration of ownership explicitly stated that the person signing
the document, a "Document Control Officer for Select Portfolio Servicing, Inc.,"
was "duly authorized to make [the] declaration on behalf of" BONY, and identified
BONY the beneficiary.16 SPS, acting "as Attorney in Fact" for BONY, appointed
Quality.17
We conclude that, because SPS was acting as BONY's agent, neither
BONY nor SPS violated the DTA when SPS appointed Quality as the trustee.
Thus, the Daviscourts have not shown that the SPS defendants engaged in any
unfair or deceptive practices, and the trial court appropriately dismissed the
Daviscourts' CPA claims against them.
16 CP at 54.
17 CP at 31-32.
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No. 74979-0-1/ 20
Unfair or Deceptive Acts — Quality
The Daviscourts argue that Quality violated the DTA. We conclude that,
even assuming Quality violated the DTA,the Daviscourts have not shown that that
violation constitutes an unfair or deceptive act.
The DTA assigns the trustee a "duty of good faith to the borrower,
beneficiary, and grantor." RCW 61.24.010(4).
The Daviscourts argue that Quality violated the DTA by breaching its duty
of good faith to them in two ways. First, the Daviscourts argue that Quality violated
its duty of good faith when it "ignored obvious problems with its appointment as
trustee."18 Because, as explained above, there was nothing wrong with that
appointment, we reject that argument. In their reply brief, the Daviscourts argue
that Quality was not entitled to rely on the declaration of ownership because the
declaration was contested." But none of the evidence the Daviscourts cite gives
rise to an inference that Quality would have known the declaration was contested
before it initiated foreclosure proceedings.
Second, the Daviscourts argue that Quality violated its duty of good faith by
failing to notify the Daviscourts that it had cancelled the trustee's sale. Once again,
the Daviscourts do not cite any authority that a trustee has a duty to notify the
borrower when it cancels the sale. The Daviscourts cite numerous examples of
courts holding that a trustee's actions or inactions violated the CPA, but all of the
actions are more serious than failing to notify the borrower that the trustee has
cancelled the sale. See, e.q., Klem v. Wash. Mut. Bank, 176 Wash. 2d 771, 789-92,
18 Appellants' Opening Br. at 47.
18 Appellants' Reply Br. at 24.
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No. 74979-0-1/ 21
295 P.3d 1179 (2013)("Quality abdicated its duty to act impartially toward both
sides" when it refused to postpone a trustee's sale because it did not have the
beneficiary's permission.).20
We conclude that the Daviscourts have not shown that Quality breached its
duty of good faith when it failed to notify them that it had cancelled the sale.
Finally, the Daviscourts argue that Quality violated its statutory duty to
maintain a physical presence in Washington.
The trustee "must maintain a physical presence" at a "street address" in
Washington, prior to the date of the notice of trustee's sale and continuing
thereafter through the date of the trustee's sale. RCW 61.24.030(6). The statute
does not define "physical presence."
Here, Mark's unsuccessful attempts to access Quality's office and his
observation that the callbox at Quality's alleged address did not list Quality in the
directory are sufficient to raise a genuine issue of material fact whether Quality had
any employees working at its address in Seattle. Therefore, the Daviscourts have
likely raised a genuine issue of material fact whether Quality violated the DTA.
But, regardless, that is not the end of the inquiry. The Daviscourts also have
to show that the violation of the DTA is an unfair or deceptive act. Relying on Frias
v. Asset Foreclosure Services, Inc., the Daviscourts appear to argue that any
violation of the DTA is automatically a deceptive or unfair practice. 181 Wash. 2d
412, 432-33, 334 P.3d 529 (2014). In fact, the holding in Frias is much more
20 But, in Klem, the court also relied on the trustee's fiduciary duty to the grantor. 176
Wash. 2d at 789-92. In 2008, the legislature amended the DTA, adding a provision that
explicitly stated that the trustee does not have a fiduciary duty to the grantor. RCW
61.24.010(3)(amended by LAWS OF 2008, ch. 153, § 1).
21
No. 74979-0-1 /22
limited. "[U]nder appropriate circumstances, DTA violations may be actionable
under the CPA .... Such claims are governed by the ordinary principles applicable
to all CPA claims." Frias, 181 Wash. 2d at 433. To show that an act is unfair or
deceptive under ordinary CPA principles, a "plaintiff need not show the act in
question was intended to deceive, only that it had the capacity to deceive a
substantial portion of the public." Panag v. Farmers Ins. Co., 166 Wash. 2d 27, 47,
204 P.3d 885 (2009).
Here, the Daviscourts have not made any showing that the failure to
maintain a physical presence had the capacity to deceive a substantial portion of
the public. Accordingly, we conclude that the trial court properly granted summary
judgment dismissing the Daviscourts' CPA claims.
Affirmed.
WE CONCUR:
22
Daviscourt v. Quality Loan Services Corporation of Washington
No. 74979-0-1
DWYER, J.(concurring)—I disagree that a question of fact was
presented regarding whether Quality maintained a physical presence at a street
address in Washington. All evidence is that it did.
The Dayiscourts' evidence is that Mark located the Quality office at
the street address set forth but that he was unable to gain access. Nothing in the
statute requires that a borrower—without an appointment—be granted access to
Quality's office at the borrower's whim.
No question of fact is presented on this issue. In all other respects,
I join in the majority opinion.