Christopher E. Larson, Et Ano, V. New Century Mortgage ( 2021 )

THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
CHRISTOPHER LARSON and ANGELA No. 80968-7-I
LARSON,
DIVISION ONE
Appellants,
PUBLISHED OPINION
v.
SNOHOMISH COUNTY, a Washington
State Municipal Corporation; CAROLYN
WEIKEL, individually and as the
SNOHOMISH COUNTY AUDITOR and
Registrar; SONJA KRASKI, individually
and as the SNOHOMISH COUNTY
CLERK; JANE DOE, individually and as
SNOHOMISH COUNTY EXAMINER OF
TITLES and LEGAL ADVISOR TO THE
REGISTRAR; SNOHOMISH COUNTY
SUPERIOR COURT JUDGES GEORGE
F. APPEL, GEORGE N. BOWDEN,
MARYBETH DINGLEDY, JANICE E.
ELLIS, ELLEN J. FAIR, ANITA L. FARRIS,
MILLIE M. JUDGE, LINDA C. KRESE,
DAVID A. KURTZ, JENNIFER R.
LANGBEHN, CINDY A. LARSEN, ERIC Z.
LUCAS, RICHARD T. OKRENT, BRUCE
J. WEISS, and JOSEPH P. WILSON; THE
STATE OF WASHINGTON;
WASHINGTON STATE GOVERNOR JAY
INSLEE in his official capacity;
WASHINGTON STATE ATTORNEY
GENERAL ROBERT FERGUSON in his
official capacity as WASHINGTON
ATTORNEY GENERAL; JOHN DOES,
Successors in interest and assigns to
No. 80968-7-I and No. 81874-1/2
NEW CENTURY MORTGAGE COMPANY
and MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.;
DEUTSCHE BANK NATIONAL TRUST
COMPANY; DEUTSCHE BANK
NATIONAL TRUST COMPANY as trustee
for Morgan Stanley ABS Capital I Inc.
Trust 2007-HE2 Mortgage Pass Through
Certificates, Series 2007; MORGAN
STANLEY ABS CAPITAL I INC. TRUST
2007-HE2; QUALITY LOAN SERVICE
CORPORATION OF WASHINGTON, a
Washington Corporation; SELECT
PORTFOLIO SERVICING, INC., a Utah
corporation; and MORTGAGE
ELECTRONIC RECORDING SYSTEM,
INC., a Delaware Corporation,
Respondents.
CHRISTOPHER LARSON and ANGELA No. 81874-1-I
LARSON,
Appellants,
v.
NEW CENTURY MORTGAGE; JANE
DOE; ALL OTHER PERSONS OR
PARTIES UNKNOWN CLAIMING ANY
RIGHT, TITLE, ESTATE, LIEN OR
INTEREST INTO, OR UPON THE REAL
PROPERTY DESCRIBED HEREIN,
Respondents.
ANDRUS, A.C.J. — Christopher and Angela Larson appeal adverse rulings
in two separate lawsuits related to the nonjudicial foreclosure of their home. They
challenge the dismissal of a Torrens Act 1 application they filed in Snohomish
County Superior Court 2 and the dismissal of a lawsuit they filed in Skagit County
1Ch. 65.12 RCW.
2The Snohomish County Torrens Act application was filed as Snohomish County Superior Court
No. 18-2-04994-31. We will refer to this lawsuit hereinafter as the “Torrens Act proceeding.”
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Superior Court against the State of Washington, Snohomish County, its superior
court judges, the successor lender, foreclosure trustee, and loan servicer. 3
In both proceedings, the Larsons sought a judicial determination that the
2006 deed of trust they granted to their initial lender, New Century Mortgage
Company, was invalid. In the Skagit County lawsuit, the Larsons sought
declaratory relief against the Public Defendants, 4 seeking to compel them to
comply with the Torrens Act. They also sought monetary damages and injunctive
relief against the successor lender, the trustee, and loan servicer 5 for alleged
violations of the Deed of Trust Act (DTA) 6 and the Consumer Protection Act
(CPA). 7
Although the Larsons sought injunctive relief, they never actually moved to
enjoin the nonjudicial foreclosure sale. The trustee proceeded with the sale after
which the trial court dismissed the Larsons’ claims against the Public Defendants
under CR 12(b)(6) and transferred venue for the remaining claims against the
Private Defendants to Snohomish County Superior Court. The court subsequently
dismissed all remaining claims on summary judgment. The court also dismissed
the Larsons’ Torrens Act application because they were no longer title owners of
the property.
3 The Skagit County lawsuit was filed under Skagit County Superior Court No. 18-2-01234-29. The
court transferred venue of the lawsuit to Snohomish County Superior Court in January 2019, and it
proceeded under Snohomish County Superior Court No. 19-2-01383-31.
4 We refer hereafter to the State of Washington, Governor Inslee, and Attorney General Ferguson
collectively as “the State Defendants.” We refer to Snohomish County, its auditor, its examiner of
titles, and the Snohomish County superior court judges as “the County Defendants.” We refer to
the State Defendants and the County Defendants collectively as “the Public Defendants.”
5 We refer hereafter to Deutsche Bank Trust Company, as trustee for Morgan Stanley ABS Capital
I, Inc. Trust 2007-HE2, Quality Loan Service Corporation of Washington, Select Portfolio Servicing,
Inc. and Mortgage Electronic Recording System (MERS) collectively as “the Private Defendants.”
6 Ch. 61.24 RCW.
7 Ch. 19.86 RCW.
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On appeal, the Larsons raise a number of statutory and constitutional
arguments, none of which have merit. We therefore affirm the dismissal of both
lawsuits.
FACTUAL BACKGROUND
In October 2006, Christopher Larson 8 purchased a house in Snohomish
County and borrowed $218,000 from New Century Mortgage Corp. (New Century)
to do so. Christopher signed the promissory note in which he agreed to make
monthly loan payments beginning December 1, 2006. Christopher and his wife,
Angela, executed a deed of trust securing the loan. The deed of trust identified
Christopher as the borrower, New Century as the lender, First American Title as
the trustee, and Mortgage Electronic Registration Systems, Inc. (MERS) as the
beneficiary. The sellers, Tyson and Alisia Bushnell, executed a statutory warranty
deed, conveying the property to Christopher, on October 9, 2006.
The Larsons allege that New Century declared bankruptcy in April 2007 and
declined to accept their mortgage payment in August 2007. Angela testified that
she contacted New Century and was informed that the lender no longer “had [their]
mortgage” and could not tell her to whom they should pay their mortgage payment.
In October 2007, the Larsons received a notice of default on behalf of Countrywide
Home Loans through its servicer, Recontrust. The Larsons, believing their home
was in foreclosure, moved to Idaho, where they lived for eight years.
The Larsons do not dispute that they made no regular mortgage payments
after July 2007. In 2009, they received another notice of default from BAC Home
8We refer to Christopher and Angela Larson by their first names for ease of reference. We mean
no disrespect in doing so.
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Loans and in 2010, they received both a notice of default and a notice of trustee
sale from Recontrust on behalf of Bank of America. The Larsons did not respond
to any of these notices and made no loan payments in response to them.
In July 2010, MERS assigned its interest in the Larson deed of trust to
Deutsche Bank, the note holder at the time. That same month, Recontrust issued
a notice of trustee sale, identifying Deutsche Bank as the assignee under the deed
of trust, but it apparently did not proceed with the sale.
In August 2012, the Larsons received a letter from Select Portfolio
Servicing, Inc. (SPS), identifying itself as the new loan servicer. In May 2014, SPS
referred the account to a new trustee, Northwest Trustee Services, Inc., to
commence foreclosure. At that point, the Larsons retained counsel who began
corresponding with Northwest Trustee Services and SPS, challenging the validity
of the debt and the right of any lender to conduct a nonjudicial foreclosure sale.
The Larsons made no payments on the note until May 2017, when they made one
partial mortgage payment.
On December 22, 2017, North Cascade Trustee Services, Inc., the
successor trustee, issued a notice of default on behalf of the note holder, Deutsche
Bank. North Cascade recorded a notice of trustee’s sale in February 2018 and set
a sale date of June 29, 2018.
On May 17, 2018, SPS appointed Quality Loan Service Corporation of
Washington (QLS) as successor trustee under the deed of trust.
On June 5, 2018, the Larsons filed an “Application for ‘Torrens’ Registration
of Title to Land” in Snohomish County Superior Court. In this application, the
Larsons alleged that “[t]here a[re] no known valid liens or encumbrances on the
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listed property,” and sought a court order declaring that they held sole title to their
land. The Larsons attached to their application a copy of a Ticor Title Company
commitment for title insurance, with an effective date of June 9, 2017. This
commitment, by its terms, was no longer in effect, as it had expired six months
after its effective date. The commitment also identified as an encumbrance, and
excluded from any title insurance coverage, the recorded Deutsche Bank deed of
trust.
The next day, on June 6, 2018, QLS executed a notice of discontinuance of
the trustee sale scheduled for June 28, 2018, and issued a new notice of trustee’s
sale, rescheduling the foreclosure sale for October 12, 2018. The notice was
recorded on June 8, 2018. There is no evidence in the record that Deutsche Bank,
QLS, or SPS was aware of the Larsons’ Torrens Act application before issuing this
notice of trustee sale. At some point, QLS continued the foreclosure sale to
November 16, 2018.
The Larsons did not move to enjoin the foreclosure sale. Nor did they file a
motion in the Torrens Act proceeding to obtain any relief under that statute.
Instead, on October 18, 2018, they initiated a lawsuit in Skagit County Superior
Court against the Public and Private Defendants, alleging several causes of action.
The Larsons sought declaratory and injunctive relief against the Public
Defendants, seeking an order compelling the County Defendants to create a
Torrens Act system, compelling the superior court judges to comply with their
duties under the Torrens Act, compelling the State Attorney General to “provide
guidance to the court” on how to comply with the Torrens Act, and compelling the
Governor to fulfill his duty to “see that the laws are faithfully executed.”
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The Larsons alleged that they wanted to register their interest in the land
under the Torrens Act, but if they could not do so, they alternatively sought to quiet
title, alleging that the original promissory note had been forged, that the original
loan had never been funded, that Deutsche Bank had no interest in the property
under the deed of trust, and that foreclosure was barred by the statute of
limitations.
They also sought damages and injunctive relief against Deutsche Bank,
MERS, SPS, and QLS under the CPA. They claimed that these Private
Defendants violated the CPA by attempting to collect a “loan which was never
funded,” “[i]ntentionally splitting the note from the Security Instrument and
transferring each separately,” falsifying or forging a note, charging fees not owed,
and violating the DTA by attempting to foreclose on a void note and deed of trust
after the expiration of the statute of limitations. They further alleged that the DTA
was unconstitutional on its face and as applied to them. 9 Finally, they alleged
numerous but unspecified “equitable claims” to preclude Deutsche Bank from
foreclosing on their home.
When the Larsons did not obtain a court order precluding Deutsche Bank
and QLS from conducting the scheduled nonjudicial foreclosure sale, QLS sold the
Larsons’ property to Deutsche Bank on November 16, 2018, and recorded the
trustee deed of sale on November 21, 2018.
9 The Larsons also alleged claims under the Washington Collection Agency Act, Ch. 19.16 RCW,
the Consumer Loan Act, Ch. 31.04 RCW, and 42 U.S.C. §1983. The Larsons do not challenge the
dismissal of these claims.
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On November 30, 2018, the Public Defendants moved to dismiss the
Larsons’ claims against them, arguing that the Larsons’ Torrens Act application
was deficient due to their failure to file an abstract of title as required by RCW
65.12.085, and, in the alternative, moved to transfer venue to Snohomish County
Superior Court under RCW 4.12.010(1) and RCW 4.12.020(2).
QLS moved to dismiss the claims asserted against it, arguing the DTA is
constitutional, the Larsons waived any claims by failing to seek an injunction of the
sale before it occurred, Deutsche Bank was the holder of the Larson promissory
note and entitled to foreclose, the foreclosure sale complied with the DTA, and the
statute of limitations did not bar foreclosure. QLS also joined in the Public
Defendants’ motions. Deutsche Bank, SPS and MERS joined the motions filed by
the Public Defendants and QLS.
At a December 2018 hearing on these motions, the Larsons asked Skagit
County Superior Court Judge Svaren to recuse himself, a request the court denied.
The court granted the Public Defendants’ motions and dismissed all claims against
them without prejudice. The court separately granted the Private Defendants’
motion to dismiss with prejudice the Larsons’ quiet title claim, concluding that the
Larsons’ failure to enjoin the trustee sale under RCW 61.24.127(2) barred that
claim. The court denied the motion to dismiss the CPA claim, the claim for
declaratory relief as to the constitutionality of the DTA, and the Larsons’ claim for
“equitable causes of action.” The court concluded venue in Snohomish County
was mandatory under RCW 4.12.020(1) and transferred all remaining claims to
Snohomish County Superior Court.
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In July and August 2019, the Private Defendants moved for summary
judgment dismissal of all remaining claims. While the parties were briefing these
summary judgment motions, the Larsons moved to amend their complaint to add
new causes of action against the Private Defendants and to add as defendants the
Washington State Treasurer, the Washington State Investment Board, the
Snohomish County Treasurer, Snohomish County Prosecuting Attorney, and
Snohomish County Sheriff. They simultaneously moved to disqualify all
Snohomish County judicial officers on the grounds that they were named as
defendants to the action. The presiding judge of Snohomish County Superior
Court granted the motion to disqualify the named judges and assigned the case to
Judge Svaren, sitting in the capacity of a visiting judge for Snohomish County
Superior Court.
Judge Svaren heard oral argument on the Larsons’ motion to amend their
complaint on October 23, 2019. The court denied the motion in part, concluding
that the proposed amended complaint realleged a claim for quiet title, a claim the
court had already dismissed with prejudice, and realleged violations of the Torrens
Act, claims the court had dismissed for lack of compliance with that statute. The
Larsons reminded the court that it had dismissed the Torrens Act claims without
prejudice. The court responded “It does not make any difference to the court,
because as I said, the basis of that ruling remains the same. There was no abstract
filed. [The] Torrens Act was not properly invoked and therefore there’s no
judiciable controversy.” 10
10The court granted the motion to the extent the Larsons sought to assert their “undefined equitable
claims,” and the CPA claim. It also ruled that the Larsons could proceed with their constitutional
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Despite this ruling, on October 24, 2019, without notice to any of the other
parties, the Larsons appeared in the Ex Parte Department of the Snohomish
County Superior Court and presented a motion to a commissioner for an order
referring their Torrens Act application to the county examiner of titles. They
attached to this motion the same expired Ticor Title Company commitment for title
insurance as they had previously attached to their June 2018 application, and
represented to the commissioner that this document was an “abstract of title,”
despite the fact that Judge Svaren had ruled that the document did not constitute
an abstract of title under the Torrens Act. The commissioner signed an order
referring the Larsons’ application to the county examiner of titles. 11
On November 11, 2019, the court granted the Private Defendants’ summary
judgment motions.
On May 29, 2020, Deutsche Bank, now the sole owner of the property, filed
a motion to dismiss the Larsons’ Torrens Act application and the case was
assigned to Judge Okrent at Snohomish County Superior Court. The Larsons
moved for Judge Okrent to recuse himself, but the court denied the motion. At an
August 19, 2020, hearing, the court dismissed the Larsons’ Torrens Act case,
concluding that they were no longer owners of the property and had no right to
seek a title registration under the Torrens Act.
The Larsons now appeal rulings from both cases.
challenge to the DTA. It asked the Larsons to submit a new proposed amended complaint that
complied with the court’s ruling as to the claims it would allow and those it would not. We have
been unable to locate any revised amended complaint in the record before us.
11 The County Defendants moved to vacate this ruling based on the Larsons’ misrepresentations
to the commissioner, but subsequently withdrew that motion when Deutsche Bank moved to
dismiss the application.
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ANALYSIS
1. The Deeds of Trust Act and the Torrens Act
At the heart of this case is a question of the relationship between two
statutes, the well-known Deeds of Trust Act (DTA), chapter 61.24 RCW, and the
lesser-known and rarely used Torrens Act, chapter 65.12 RCW. The Larsons
contend that they had the statutory right to initiate a Torrens Act proceeding to
register title to their land and to clear any cloud to that title, including obtaining a
judicial determination as to the validity of the Deutsche Bank deed of trust. They
argue that simply filing the Torrens Act proceeding had the legal effect of staying
any nonjudicial foreclosure sale—even in the absence of a court order enjoining
the sale—and that the Public Defendants denied them the right to this proceeding
by not having a functioning Torrens Act system. They further argue that Deutsche
Bank and the trustee violated the DTA by proceeding with the nonjudicial
foreclosure sale once the Larsons filed their Torrens Act petition.
To analyze their claims, we need to understand the difference between the
DTA and the Torrens Act. Most homeowners have a basic understanding of a
mortgage. “A mortgage [is] a mechanism to secure an obligation to repay a debt,”
and has existed since “at least the 14th century.” Bain v. Metro. Mortg. Grp., Inc.,
175 Wn.2d 83, 92, 285 P.3d 34 (2012). Most mortgages today are secured by a
deed of trust on the property. Id. Under the DTA, a deed of trust creates a three-
party transaction in which the borrower conveys their property to a trustee who
holds in trust for the lender, who is the beneficiary of this transaction. Id.Under the DTA, if the deed of trust explicitly provides the trustee with the
power of sale on a default of the underlying loan, the trustee may foreclose the
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deed of trust and sell the property without judicial supervision, i.e., through a
nonjudicial foreclosure sale. Id. at 93 (citing RCW 61.24.020, RCW 61.12.090,
and RCW 7.28.230(1)). Because the power to sell is “a significant power,” the DTA
sets out specific procedures a trustee must follow before it may legally conduct
such a sale. Id.In interpreting the DTA, our Supreme Court has advised courts to keep in
mind the statute’s three basic objectives: the nonjudicial foreclosure process
should remain efficient and inexpensive, the process should provide an adequate
opportunity for interested parties to prevent wrongful foreclosure, and the process
should promote the stability of land titles. Id. at 94; accord Jackson v. Quality Loan
Serv. Corp., 186 Wn. App. 838, 848, 347 P.3d 487 (2015).
While the DTA governs the use of deeds of trust to secure home loans and
the process by which lenders may enforce their rights against borrowers who
default on those loans, the Torrens Act has nothing to do with the securitization of
residential mortgages or the enforcement of rights under deeds of trust. The
Torrens Act is instead one of two recognized methods of establishing who holds
legal title to a piece of real estate.
Under RCW 65.04.020(1), each county auditor must have a system of
recording transfers of real property. The auditor, acting as the “register of deeds,”
maintains actual books containing copies of all instruments affecting title to parcels
of land within the county. 18 W ILLIAM B. STOEBUCK & JOHN W. W EAVER,
WASHINGTON PRACTICE: REAL ESTATE: TRANSACTIONS § 14.6 (2d ed. 2004). An
auditor must record documents if certain requisites are met. Id. The auditor
maintains a general index of all recorded documents. Id. (citing RCW 65.04.050).
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This recording system does not determine the validity of any deed or
encumbrance; it instead merely provides notice, and establishes priority of,
recorded legal interests in the land. Id. at § 14.5; see also Dickson v. Kates, 132
Wn. App. 724, 737, 133 P.3d 498 (2006) (“our recording statutes are intended to
provide constructive notice to land possessors who have restrictions burdening
their land”). Recording a deed or other conveyance document with a county
auditor is not required by law, but is, instead, permissive. Id. (citing RCW
65.08.070). Once an encumbrance is recorded, a subsequent purchaser is
deemed to have constructive notice of it, but anyone searching the county land
index has a right to rely on it and is not bound to search for records outside the
recorded chain of title. Dickson, 132 Wn. App. at 737.
Because recording a deed or some other encumbrance does not establish
its legal validity, chain-of-title issues can arise. 18 STOEBUCK & W EAVER, supra §
14.11. Such problems arise rarely in Washington because of the prevalence of
title insurance companies, who conduct title searches to identify instruments that
create a cloud on one’s title. Id.
The Torrens Act, unlike the recording statutes, establishes a system for
adjudicating the validity of one’s title and any encumbrances on land through a
process called “registration.” Id. at § 14.13; RCW 65.12.005. Adopted by the
Washington legislature in 1907, the Torrens Act allows a landowner to apply to
have their title registered by filing a petition for registration with the superior court
for the county in which the land is situated. RCW 65.12.005; RCW 65.12.040. The
court must then “inquire into the condition of the title to and any interest in the land
and any lien or encumbrance thereon,” and enter a judicial decree declaring the
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validity of title and any liens or encumbrances on the land, declaring the priority of
any such encumbrances, and removing any clouds on the title. RCW 65.12.040.
The process starts with the filing of an application and “an abstract of title”
in superior court and recording the application with the county auditor. RCW
65.12.005 (recording with auditor required); RCW 65.12.040 (filing application with
superior court required); RCW 65.12.085 (filing abstract of title required); 18
STOEBUCK & W EAVER, supra §14.14. The clerk must certify a copy of the
application and file it with the auditor, at which time the application has “the force
and effect of a lis pendens.” RCW 65.12.100.
When the abstract of title is on file, the superior court “shall enter an order
referring the application to an examiner of titles.” RCW 65.12.110. The title
examiner examines the abstract of title, searches records, “investigate[s] all the
facts brought to his or her notice,” and then issues a report containing his or her
opinion on the title. If the opinion is adverse to the applicant, they may withdraw
the application or proceed with further judicial proceedings. Id. Summonses are
issued to any person found by the examiner as being in possession of the property
or having a lien, encumbrance, or any other right, title or interest in the land. RCW
65.12.120, RCW 65.12.130.
Once summonses have issued and those served have appeared and
answered, the superior court may decide the case or may refer the matter to the
title examiner to take evidence and report their findings to the court. RCW
65.12.160. RCW 65.12.165. If the court determines the applicant holds title to the
land, it may issue a decree of confirmation and registration. RCW 65.12.175. This
decree becomes binding and conclusive as against all other parties to the action.
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Id. And the person receiving the certificate of title holds that title “free from all
[e]ncumbrances except only such estates, mortgages, liens, charges and
interests” noted in the last certificate of title in the registrar’s office. RCW
65.12.195.
The Torrens Act has been “little used” since its adoption, the primary reason
being
the trouble and expense of converting from recorded to registered
title. Since all land was under record title when the Torrens system
was adopted and since the certificate of registration is, with a few
exceptions, conclusive as to the state of title, it is necessary to have
a kind of quiet title action in court to establish the title and other
interests that will appear on the original [title] certificate.
18 STOEBUCK & WEAVER, supra, § 14.13 at 161.
2. Larsons’ Torrens Act Claims Against Public Defendants
The Larsons first contend the trial court erred in dismissing their declaratory
judgment action against the Public Defendants because it lacked subject matter
jurisdiction over the adequacy of their Torrens Act application. The Larsons also
contend their Torrens Act application was not defective because the Ticor Title
Insurance document they submitted to the court was the equivalent of an abstract
of title as that term is used in RCW 65.12.085.
We review de novo a dismissal under CR 12(b)(6). Leishman v. Ogden
Murphy Wallace, PLLC, 196 Wn.2d 898, 903, 479 P.3d 688 (2021). A dismissal
at this stage of the proceedings will be affirmed if it appears beyond doubt that the
plaintiff can prove no set of facts consistent with the complaint that would entitle
him or her to relief. Id. at 903-04.
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The Larsons’ subject matter argument lacks merit. A superior court has
subject matter jurisdiction “where it has authority to adjudicate the type of
controversy involved in the action.” Boudreaux v. Weyerhaeuser Co., 10 Wn. App.
2d 289, 295, 448 P.3d 121 (2019) (quoting In re Marriage of McDermott, 175 Wn.
App. 467, 480-81, 307 P.3d 717 (2013)). The Washington Constitution provides
that “The superior court shall also have original jurisdiction in all cases and of all
proceedings in which jurisdiction shall not have been by law vested exclusively in
some other court.” CONST. art. IV, § 6.
The Larsons do not argue that any of their claims against the Public
Defendants have been vested in the exclusive jurisdiction of another forum.
Instead, they argue that Skagit County Superior Court lacked jurisdiction under the
“prior exclusive jurisdiction doctrine,” which, they assert, stands for the proposition
“that two courts do not have the jurisdiction to adjudicate the same case at the
same time.” The Larsons argue that under the doctrine, Skagit County Superior
Court’s 2018 ruling that their Torrens Act application was defective conflicts with
the Snohomish Superior Court’s 2019 order accepting the application and referring
it to the county examiner of titles.
No Washington court has ever held that the prior exclusive jurisdiction
doctrine applies in this state. The Larsons’ position is puzzling because they
themselves invoked the Skagit County Superior Court’s jurisdiction by filing this
lawsuit in that court and seeking relief for Snohomish County’s alleged inaction
with regards to their Torrens Act application. The Larsons sought a court order
requiring the Snohomish County Superior Court to process their Torrens Act
application; the County Defendants argued they had no duty to do so because the
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Larsons failed to file a valid application under the statute. Because the defense to
the Larsons’ claims against the County Defendants was the invalidity of their
application and the Larsons invoked the subject matter jurisdiction of the superior
court, the Skagit County Superior Court had the authority to render a ruling on
whether the Larsons complied with RCW 65.12.085.
The Larsons also argue that Skagit County Superior Court lacked
jurisdiction under the “priority of action rule.” This argument fails for similar
reasons. “The rule provides generally that the first court to obtain jurisdiction over
a case possesses exclusive jurisdiction to the exclusion of other coordinate
courts.” Am. Mobile Homes of Wash., Inc. v. Seattle-First Nat'l Bank, 115 Wn.2d
307, 317, 796 P.2d 1276 (1990). “[T]he rule should not be automatically applied
each time two similar cases are pending in different counties. For instance . . .
there must be identity of subject matter, relief, and parties between the actions
before the priority rule should be applied.” Id.The Larsons chose to sue the Public Defendants in Skagit County Superior
Court. They cite no authority for the proposition that, because they filed a Torrens
Act application in Snohomish County Superior Court, this act divested Skagit
County Superior Court of the jurisdiction to rule on a case properly before it under
the elective venue statute, RCW 36.01.050(1). These are two different cases. The
issue the Larsons presented before Skagit County Superior Court was whether
they were entitled to an injunction requiring Snohomish County to take action under
the Torrens Act. Any issues with Skagit County Superior Court’s jurisdiction were
rendered moot when the Skagit County Superior Court transferred venue to
Snohomish County Superior Court, the court the Larsons now claim should have
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ruled on the adequacy of their Torrens Act application in the first instance. We
reject the Larsons’ subject matter jurisdiction argument.
As to the merits of the dismissal, the Larsons’ claims against the Public
Defendants rested on the allegation that Snohomish County failed to follow the
mandatory procedures laid out in the Torrens Act with regard to their land title
application. The Larsons alleged that they filed their application in court on June
5, 2018, that the clerk did not file the application in the “land registration docket,”
and that the superior court did not refer the application to a county title examiner
as required under the statute. The trial court dismissed this claim without
prejudice, concluding that the Larsons’ application did not trigger the County’s
duties under the Act because the application did not include the required abstract
of title. We affirm this ruling.
The Larsons argued below that their application was not defective because
there is a question of fact as to whether their title insurance commitment
constitutes an “abstract of title” under the Torrens Act. But the meaning of RCW
65.12.085 is a question of law, not a question of fact, and we review the trial court’s
interpretation de novo. Dept. of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1,
9, 43 P.3d 4 (2002).
RCW 65.12.085 requires the filing of “an abstract of title such as is now
commonly used.” Commentators have stated, “[n]ow that abstracts of title are no
longer ‘commonly used’ in Washington, it is unclear whether an old-fashioned
abstract must be produced, if anyone can be found to make up one, or whether a
preliminary commitment for title insurance . . . will suffice.” 18 STOEBUCK &
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WEAVER, supra, § 14.14 at 163. We conclude a preliminary commitment for title
insurance does not suffice under the Torrens Act.
First, although the Torrens Act does not define “abstract of title,” our
legislature has passed statutes distinguishing between an abstract of title, a title
policy, a preliminary title report, and a commitment for title insurance. Barstad v.
Stewart Title Guar. Co., Inc., 145 Wn.2d 528, 537, 39 P.3d 984 (2002). In the
chapter regulating title insurers, chapter 48.29 RCW, the legislature defined an
abstract of title as follows:
[A] written representation, provided under contract, whether
written or oral, intended to be relied upon by the person who has
contracted for the receipt of this representation, listing all recorded
conveyances, instruments, or documents that, under the laws of the
state of Washington, impart constructive notice with respect to the
chain of title to the real property described. An abstract of title is not
a title policy as defined in this subsection.
RW 48.29.010(3)(a). A title insurance commitment serves a very different
purpose:
"Preliminary report," "commitment," or "binder" means reports
furnished in connection with an application for title insurance and are
offers to issue a title policy subject to the stated exceptions in the
reports, the conditions and stipulations of the report and the issued
policy, and other matters as may be incorporated by reference. The
reports are not abstracts of title, nor are any of the rights, duties, or
responsibilities applicable to the preparation and issuance of an
abstract of title applicable to the issuance of any report. The report is
not a representation as to the condition of the title to real property,
but is a statement of terms and conditions upon which the issuer is
willing to issue its title policy, if the offer is accepted.
RCW 48.29.010(3)(f). Requiring a Torrens Act applicant to file and record an
abstract of title serves the purpose for which this requirement is intended: it
provides the title examiner a report as to the condition of the title to real property.
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Allowing the applicant to file a title insurance commitment would not serve this
purpose because a commitment makes no representations as to chain of title.
Second, even if a title insurance policy could serve the same purpose as an
abstract of title, the Larsons’ Ticor Title commitment expired a year before they
filed it. An expired title insurance commitment clearly cannot meet the purpose of
an abstract of title under RCW 65.12.085. The trial court correctly concluded that
the County Defendants had no duty to process the Larsons’ Torrens Act
application in the absence of the statutorily mandated abstract of title.
The Larsons now argue that they should have had the opportunity to amend
their Torrens Act application and file the requisite abstract of title. But they had
this opportunity; the trial court’s dismissal was without prejudice. The Larsons
could have remedied the defect in their Torrens Act application by obtaining, filing,
and recording a current abstract of title and, if the County then failed to act, could
have renewed its claim for injunctive relief. And the Larsons also had time to move
to enjoin the nonjudicial foreclosure sale to give them time to remedy the defect.
At the time they sought Torrens Act relief in June 2018, the foreclosure sale was
four months away and then continued another month. They inexplicably chose not
to take advantage of these options. Dismissal without prejudice was appropriate.
As to the claims against the State Defendants, the trial court correctly
concluded that they have neither the duty nor the authority to force the County or
its superior court judges to take the action the Larsons demanded and such an
order would constitute a violation of the doctrine of separation of powers.
The Constitution provides that “[t]he attorney general shall be the legal
adviser of the state officers, and shall perform such other duties as may be
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prescribed by law.” CONST. ART. III, § 21. The legislature has delineated the
Attorney General’s “other duties” in various statutes, 12 but none establish the
mandatory duty the Larsons seek to enforce here. The Constitution also provides
that the Governor “shall see that the laws are faithfully executed.” CONST. art. III,
§ 5.
The Larsons argue that the Attorney General’s position as “the chief law
enforcement officer for Washington State” and the Governor’s duty to “see that the
laws are faithfully executed” imposes a duty to compel the county to develop a
Torrens Act system. But neither the Attorney General nor the Governor have any
duty or enforcement authority under the Torrens Act. See RCW 65.12.
The Larsons essentially seek a writ of mandamus against the State
Defendants. A writ of mandamus “is an extraordinary remedy that we grant only if
the mandatory act sought to be compelled is not discretionary.” Goldmark v.
McKenna, 172 Wn.2d 568, 576, 259 P.3d 1095 (2011). “Mandamus, therefore, is
an appropriate remedy only where the law prescribes and defines the duty to be
performed with such precision and certainty as to leave nothing to the exercise of
discretion or judgment.” Colvin v. Inslee, 195 Wn.2d 879, 893, 467 P.3d 953(2020) (citations omitted). To order a mandamus to compel discretionary duties of
a public official would be to “usurp the authority of the coordinate branches of
government.” Walker v. Munro, 124 Wn.2d 402, 410, 879 P.2d 920 (1994).
Because the Larsons have not identified any mandatory duty on behalf of the
Governor or Attorney General, the trial court properly dismissed the Larsons’
12 See ch. RCW 43.10.
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claims against the State Defendants.
We affirm the trial court’s order dismissing claims relating to the Torrens Act
against the Public Defendants under CR 12(b)(6).
3. Dismissal of Quiet Title Claim against Private Defendants
The Larsons next contend the trial court erred in dismissing their quiet title
claim against the Private Defendants. They raise two main arguments. First, the
Larsons argue that their June 2018 Torrens Act application precluded any
nonjudicial foreclosure sale and their failure to move to enjoin the sale did not
constitute a waiver of their quiet title claim. Second, they contend that RCW
64.24.127, the DTA waiver statute, is unconstitutional. We reject both arguments.
a. A Torrens Act application does not automatically stop a nonjudicial
foreclosure sale
The trial court dismissed the Larsons’ quiet title claim in December 2018
because they failed to obtain an order restraining the November 2018 foreclosure
sale. The trial court held that under RCW 61.24.127, the Larsons waived their
quiet title claim by failing to do so. We agree.
RCW 61.24.130 provides that a borrower may seek a court order to restrain
a nonjudicial foreclosure sale “on any proper legal or equitable ground.” The
procedure laid out in RCW 61.24.130 is “the only means by which a grantor may
preclude a sale once foreclosure has begun with receipt of the notice of sale and
foreclosure.” Cox v. Helenius, 103 Wn.2d 383, 388, 693 P.2d 683 (1985). A
borrower with notice of an impending nonjudicial foreclosure sale who does not
obtain an order restraining that sale waives any claim to the validity of the sale.
Plein v. Lackey, 149 Wn.2d 214, 225-26, 67 P.3d 1061 (2003).
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RCW 61.24.127(2)(b), (d) and (e) provide that failing to enjoin a sale does
not waive claims for monetary damages for certain common law and statutory
claims, but “[a] borrower . . . who files such a claim is prohibited from recording a
lis pendens” and “[t]he claim may not operate in any way to encumber or cloud the
title to the property that was subject to the foreclosure sale.” The Larsons did not
obtain a court order enjoining the sale and, as a result, their quiet title action
violated this provision of the DTA.
The Larsons maintain that their Torrens Act application, by itself, had the
effect of preventing a nonjudicial foreclosure sale under the DTA. RCW 65.12.210,
the Larsons’ only authority for this proposition, provides:
Any person who shall take by conveyance, attachment, judgment,
lien or otherwise any right, title or interest in the land, subsequent to
the filing of a copy of the application for registration in the office of
the county auditor, shall at once appear and answer as a party
defendant in the proceeding for registration, and the right, title or
interest of such person shall be subject to the order or decree of the
court.
(Emphasis added). This statute says nothing about whether a Torrens Act
application automatically stops a nonjudicial foreclosure sale under the DTA. It
merely states that if a person receives title to property after a Torrens Act
application is filed, then that person must become a party defendant in the Torrens
Act proceeding. RCW 65.12.210 does not support the Larsons’ argument.
Nor is their argument supported by existing case law. In Cox v. Helenius,
the Washington Supreme Court held that simply filing a lawsuit challenging the
underlying debt, filed after notice of sale and foreclosure has been received, does
not have the effect of restraining the sale. 103 Wn.2d at 388. In Plein v. Lackey,
it held that simply filing an action for a permanent injunction also does not forestall
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a trustee’s sale that occurs before that lawsuit is resolved. 149 Wn.2d at 227. Any
homeowner seeking to enjoin a sale must file a motion and obtain a court order
doing so.
By enacting RCW 61.24.127, the legislature made it clear that a borrower
cannot bring a claim that affects title to property if they do not first obtain a court
order enjoining the nonjudicial foreclosure sale. There is nothing to suggest that
the legislature intended to exempt a quiet title action initiated under the Torrens
Act from the scope of this waiver provision. We therefore reject the Larsons’
contention that the mere filing of a Torrens Act application under Chapter 65.12
RCW somehow automatically precluded Deutsche Bank and QLS from conducting
the nonjudicial foreclosure.
The undisputed evidence supports the trial court’s conclusion that the
Larsons waived their quiet title claim. The Larsons had notice of the nonjudicial
foreclosure and did not obtain a court order enjoining the sale, either in the Torrens
Act proceeding, which was then pending in Snohomish County Superior Court, or
in any other proceeding. The trial court did not err in dismissing the quiet title
claims against the Private Defendants.
b. RCW 64.24.127, the DTA waiver statute, is constitutional
The Larsons next maintain that RCW 61.24.127 cannot constitutionally
extinguish their right to pursue a quiet title action. They contend the provision
violates the privileges and immunities provision of article I, section 12 of the state
constitution. They argue that the statute denies them the right to pursue a common
law cause of action against lenders and foreclosure trustees and unconstitutionally
confers a special privilege on these entities. We reject this argument.
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Washington courts employ a two-part test to decide if legislation violates
article I, section 12, asking first if the challenged law grants a “privilege” or
“immunity” for purposes of the state constitution, and, if yes, asking if there is a
reasonable ground for granting the privilege or immunity. Schroeder v. Weighall,
179 Wn.2d 566, 572-73, 316 P.3d 482 (2014) (citations omitted). “Not every
benefit constitutes a ‘privilege’ or ‘immunity’ for purposes of the independent article
I, section 12 analysis. Rather, the benefits triggering that analysis are only those
implicating ‘fundamental rights . . . of . . . state . . . citizenship.’” Id. at 573 (quoting
State v. Vance, 29 Wash. 435, 458, 70 P. 34 (1902)). 13 In Schroeder, the Supreme
Court recognized that “where a cause of action derives from the common law, the
ability to pursue it is a privilege of state citizenship triggering article I, section 12's
reasonable ground analysis. A law limiting the pursuit of common law claims
against certain defendants therefore grants those defendants an article I, section
12 immunity.” Id. at 573 (quotations omitted).
RCW 61.24.127 does limit the Larsons’ ability to bring a quiet title action
after a foreclosure sale, thereby implicating article I, section 12. But RCW
61.24.127 does not bar all quiet title actions; it merely affects the timing of when
such claims may be brought—parties must do so in advance of a nonjudicial
foreclosure sale. The question is whether the legislature had a reasonable ground
13 The Larsons also argue that Washington courts have recently “eliminated” installment contract
statutes of limitations and that this case law violates article 1, section 12. No Washington court has
“eliminated” the statute of limitations for installment contracts, as the Larsons suggest. Our
Supreme Court held as early as 1945 that “when recovery is sought on an obligation payable by
installments the statute of limitations runs against each installment from the time it becomes due.”
Herzog v. Herzog, 23 Wn.2d 382, 388, 161 P.2d 142 (1945). Our cases merely enforce this black
letter contract law. See Merceri v. Bank of New York Mellon, 4 Wn. App. 2d 755, 434 P.3d 84(2018) (a trustee sale is timely if note has not been accelerated and action is brought within six
years of any missed monthly installment payment). This case law does not implicate the privileges
and immunities provision of the state constitution.
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No. 80968-7-I and No. 81874-1/26
for limiting quiet title remedies in this manner.
The Larsons rely on two Supreme Court cases holding that statutes limiting
the ability of minors to bring medical malpractice claims are unconstitutional under
article I, section 12. See Schroeder, 179 Wn.2d at 566; DeYoung v. Providence
Med. Ctr., 136 Wn.2d 136, 960 P.2d 919 (1998). In both of those cases, the court
concluded that the challenged statutes did not further the legislature’s stated
objectives of reducing medical malpractice insurance premiums and barring stale
claims. Schroeder, 179 Wn.2d at 574-77; DeYoung, 136 Wn.2d at 148.
Unlike Schroeder and DeYoung, however, the timing restriction of RCW
61.24.127 advances the three basic objectives of the DTA by keeping the
foreclosure process efficient and inexpensive, retaining the opportunity for a
homeowner to prevent a wrongful foreclosure, and promoting the stability of land
titles. Bain, 175 Wn.2d at 94. The Larsons do not explain how the ability to bring
a quiet title action after a sale has concluded instead of an injunction action to
prevent the foreclosure sale from occurring, provides any more protection of their
property rights. RCW 61.24.127 is therefore supported by reasonable grounds
and does not violate the privileges and immunities clause. 14
14 The Larsons make a similar argument with respect to the limitations placed on their ability to
prosecute claims under the CPA. But they fail to demonstrate that the limitation on a statutory
cause of action falls within the scope of article 1, section 12. Generally, rights left to the discretion
of the legislature have not been considered fundamental. Martinez-Cuevas v. DeRuyter Bros.
Dairy, Inc., 196 Wn.2d 506, 475 P.3d 164 (2020). In Martinez-Cuevas, the Supreme Court held
that the statutory right to exempt dairy workers from overtime pay constituted an impermissible
privilege or immunity granted to agricultural employers. Id. at 519. But the court’s analysis was
premised on a constitutional guarantee to workers that “the legislature shall pass necessary laws
for the protection of persons working in . . . employments dangerous to life or deleterious to health.”
Id. (quoting CONST. art. II, § 35). It concluded that “[t]he right to statutory protection for health and
safety pursuant to article II, section 35” is a fundamental personal right entitled to protection by the
government. Id. at 522. The Larsons have not demonstrated that they have any similar
constitutional right, personal to them, affected by RCW 61.24.127. Thus, to the extent the DTA
limits their statutory right to recovery under the CPA, it does not implicate article I, section 12.
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No. 80968-7-I and No. 81874-1/27
4. CPA Claims & Constitutional Challenges to the DTA as Against Private
Defendants
The Larsons appear also to challenge the summary judgment dismissal of
their CPA claims and their constitutional challenges to the DTA. Because the
Larsons failed to raise a genuine issue of material fact under the CPA and their
challenges to the DTA fail as a matter of law, we affirm dismissal of these claims.
We review a summary judgment order de novo and perform the same
inquiry as the trial court. Borton & Sons, Inc. v. Burbank Props., LLC, 196 Wn.2d
199, 205, 471 P.3d 871 (2020). A moving party is entitled to summary judgment
“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.” CR 56(c). We view all facts and reasonable inferences in light most
favorable to the non-moving party. Owen v. Burlington N. Santa Fe R.R. Co., 153
Wn.2d 780, 787, 108 P.3d 1220 (2005).
a. CPA Claims 15
The Larsons contended below that the Private Defendants violated the CPA
by conducting a nonjudicial foreclosure sale in violation of the DTA. They argue
on appeal that the trial court erred in dismissing their CPA claim because the
October 2006 promissory note was not authentic, the MERS’s assignment of the
deed of trust to Deutsche Bank was invalid, New Century never funded the
15 The Larsons have not assigned error to the dismissal of CPA claims against SPS and QLS.
Generally, a party’s failure to assign error to or provide argument and citation to authority in support
of an assignment of error, as required by RAP 10.3, precludes appellate consideration of an alleged
error. Matter of WWS, 14 Wn. App. 2d 342, 350 n.4, 469 P.3d 1190 (2020). In their reply brief, the
Larsons contend that QLS violated RCW 65.12.210 by selling the home in a nonjudicial foreclosure
without participating in the Larsons’ Torrens Act proceeding. They failed to raise this argument
below and we will not address any argument raised for the first time in a reply brief. See Ainsworth
v. Progressive Cas. Ins. Co., 180 Wn. App. 52, 78 n.20, 322 P.3d 6 (2014).
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No. 80968-7-I and No. 81874-1/28
Larsons’ loan, and New Century breached its contractual obligations to the
Larsons by refusing to accept their August 2007 mortgage payment. We reject
many of these arguments as frivolous and others as simply not supported by any
evidence in this record.
To prevail on a private CPA claim, a plaintiff must establish (1) an unfair or
deceptive act or practice; (2) that occurs in trade or commerce; (3) a public interest;
(4) injury to the plaintiff; and (5) a causal link between the unfair or deceptive act
and the injury suffered. Trujillo v. Nw. Tr. Servs., Inc., 183 Wn.2d 820, 834-35,
355 P.3d 1100 (2015). The failure to establish any of the five elements is fatal to
a CPA claim. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105
Wn.2d 778, 784, 719 P.2d 531 (1986). Violations of the DTA may be actionable
under the CPA. Frias v. Asset Foreclosure Srvs., Inc., 181 Wn.2d 412, 430, 334
P.3d 529 (2014).
As to the authenticity of the Larson promissory note, the Larsons contend
that Christopher’s signature on the note was “misappropriated.” Christopher never
testified that his signature on the note was forged. Deutsche Bank produced the
original promissory note at the summary judgment hearing and demonstrated that
the note bears Christopher’s signature. In addition, the trial court had copies of
the deed of trust bearing both Christopher’s and Angela’s notarized signatures.
When they executed these documents, Christopher also executed a “Name
Affidavit,” in which he certified that he was the person named in the documents
and that his signature was his true and correct signature. This document was also
notarized on October 9, 2006, by the same notary public who notarized the deed
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No. 80968-7-I and No. 81874-1/29
of trust. There is no evidence in this record that Christopher’s signature on the
promissory note was a forgery.
The Larsons argue that under RCW 62A.3-308(a), by denying the validity
of the note, they shifted the burden of proving validity to Deutsche Bank. 16 To the
extent this statute applies, Deutsche Bank met its burden of proving the validity of
the note. The Larsons failed to present any conflicting evidence.
They also cite Stahly v. Emonds, 184 Wash. 207, 210, 50 P.2d 908 (1935),
for the proposition that whether a signature has been forged is a question of fact
and thus inappropriate for summary judgment. Stahly, however, is distinguishable.
The plaintiffs in that case testified “unequivocally” at trial that the signatures on the
documents were not theirs. Id. at 210. We have no such testimony here. There
is thus no genuine issue of material fact regarding the authenticity of the note.
The Larsons next argue that there is a genuine issue of material fact as to
whether New Century and MERS split the deed of trust and promissory note when
they named MERS as beneficiary under the deed of trust. They argue that MERS
was not an eligible beneficiary of the deed of trust (because it never held the
promissory note), and its assignment of the deed of trust to Deutsche Bank had no
legal effect unless MERS was New Century’s agent and had the authority to assign
New Century’s rights to Deutsche Bank. If MERS was not acting as New Century’s
agent at the time of the assignment, the Larsons argue, then Deutsche Bank had
no right to conduct a nonjudicial foreclosure under the DTA.
16 RCW 62A.3-308(a) provides: “In an action with respect to an instrument, the authenticity of, and
authority to make, each signature on the instrument is admitted unless specifically denied in the
pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity
is on the person claiming validity.”
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The Larsons rely on Bain for this argument. In Bain, our Supreme Court
held that MERS is an ineligible beneficiary under the DTA if it never held the
promissory note. 175 Wn.2d at 110. But it cast doubt on the theory that involving
MERS automatically constituted a “split” rendering a deed of trust unenforceable.
The court stated “While that certainly could happen, given the record before us,
we have no evidence that it did. If, for example, MERS is in fact an agent for the
holder of the note, likely no split would have happened.” Id. at 112. The Bain court
also raised a possible second legal option: the creation of an equitable mortgage
in favor of the noteholder. Id. at 112-13 (citing the RESTATEMENT (THIRD) OF
PROPERTY: MORTGAGES § 5.4 reporters' note at 386 (1997)). 17
In Walker v. Quality Loan Service Corp., 176 Wn. App. 294, 308 P.3d 716(2013), this court rejected a similar “split the note” theory. In that case, the
borrower argued that MERS was never a legitimate beneficiary under RCW
61.24.005 because it did not hold the promissory note and “the interest in the Deed
of Trust has been effectively segregated from the interest in the Note,” rendering
the deed of trust invalid. 176 Wn. App. 294 at 321. This court held that the defect
in identifying MERS as the beneficiary did not void the deed of trust and the real
beneficiary was the lender or its successors whose interests were secured by the
deed of trust. Id. at 323.
17 Under the Restatement (Third) of Property (Mortgages) §5.4 cmt. b (Am. Law Inst. 1997):
A transfer in full of the obligation automatically transfers the mortgage as well unless the
parties agree that the transferor is to retain the mortgage. The objective of this rule . . . is
to keep the obligation and the mortgage in the same hands unless the parties wish to
separate them.
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The Walker court held that the note holder and the beneficiary of a deed of
trust securing that note are legally one and the same and the note cannot be “split”
from the deed of trust:
In Bain, the Supreme Court declined to decide the legal effect of
MERS acting as an unlawful beneficiary under the DTA. However,
the court stated its inclination to agree with MERS’s assertion that
any violation of the DTA “‘should not result in a void deed of trust,
both legally and from a public policy standpoint.’” The court also
noted, “[I]f in fact MERS is not the beneficiary, then the equities of
the situation would likely (though not necessarily in every case)
require the court to deem that the real beneficiary is the lender whose
interests were secured by the deed of trust or that lender’s
successors.” While dicta, these statements identify critical problems
with Walker’s argument.
Id. at 322. The court concluded that any defect in the deed of trust through the
designation of MERS as beneficiary did not invalidate the deed of trust. Id.
Similarly, in Winters v. Quality Loan Service Corp. of Washington, Inc., 11 Wn.
App. 2d 628, 644-45, 454 P.3d 896 (2019), this court held that the holder of a
promissory note has the authority to enforce the deed of trust because “the deed
of trust follows the note by operation of law.” 18 We take this opportunity to clearly
hold that the designation of MERS as a beneficiary of a deed of trust, even though
ineligible to hold that position under the DTA, does not split the promissory note
from the deed of trust or invalidate the deed of trust.
It is undisputed that Deutsche Bank holds the Larsons’ note and was
entitled to enforce the deed of trust. Because Deutsche Bank was not barred from
foreclosing on the Larsons’ home simply because MERS was listed as the original
beneficiary under the deed of trust in 2006, it is immaterial whether MERS was
18The Ninth Circuit has also held that the split the note theory has no sound basis in law or logic.
Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1044 (9th Cir. 2011).
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No. 80968-7-I and No. 81874-1/32
acting as New Century’s agent or acting on its own behalf when it assigned the
deed of trust to Deutsche Bank.
The Larsons next argue that there is a genuine issue of material fact as to
whether New Century ever funded the Larsons’ loan. We reject this argument
because there is absolutely no evidence to support it. 19
Deutsche Bank provided the trial court with copies of the 2006 closing
documents related to New Century’s funding of the Larsons’ loan. The undisputed
evidence shows that New Century funded this loan on October 6, 2006. It
authorized the closing escrow company, First American Title, to disburse the funds
that same day. First American confirmed it had disbursed the loan proceeds from
New Century. The Larsons themselves admit that they closed their loan on
October 11, 2006 and used the funds to purchase the property. The record also
contains the statutory warranty deed by which the former owners conveyed the
property to the Larsons. The Larsons cannot point to a single piece of evidence
supporting their allegation that New Century was unable to fully fund their loan.
Finally, the Larsons argue that there is a genuine issue of material fact as
to whether New Century breached its contract by refusing to accept their August
2007 mortgage payment. Although somewhat unclear, it appears the Larsons
contend that if New Century breached an agreement with them before they
defaulted, the Larsons were then released from the obligation to make further
payments on the note. But the Larsons cite no legal authority for this proposition
19 The Larsons contend that in 2007, New Century failed to fund a number of loans made to
Washington consumers. But even if New Century had insufficient funds to fund loans in 2007, this
fact would not prove that it failed to fully fund the Larsons’ loan in October 2006.
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No. 80968-7-I and No. 81874-1/33
and it is illogical.
First, the Larsons do not explain how New Century’s refusal to accept a
payment in August 2007 constituted a material “breach” of any provision of the
promissory note. The note contains the Larsons’ promise to repay the loan through
monthly installment payments on the first day of each month. There is no evidence
that New Century declared the Larsons to be in default when they were not in
arrears. In fact, according to Angela, New Century informed her in August 2007
that the note had been assigned to someone else. So the only evidence in this
record is that New Century no longer held the note when the Larsons claim it
refused their payment.
Second, Christopher explicitly acknowledged in the note itself that “the
Lender may transfer this Note.” New Century indorsed the Larson promissory note
in blank. Under the Uniform Commercial Code (UCC), RCW 62A.3-205(b), a note
becomes payable to whomever holds the note when it is indorsed in blank. Blair
v. Nw. Tr. Srvs, Inc., 193 Wn. App. 18, 32, 372 P.3d 127 (2016). Deutsche Bank
presented undisputed testimony that it is the holder of the Larson promissory note
and had the legal right to Larsons’ installment payments.
Finally, Deutsche Bank did not seek to collect payments prior to March
2012. The final notice of default, dated December 22, 2017, stated that the
Larsons’ delinquent monthly payments began March 2012. The Larsons do not
deny that they failed to make regular payments after that date, or that servicers for
Deutsche Bank paid the property’s real estate taxes and homeowner’s insurance,
resulting in over $50,000 in escrow advances on their loan. The Larsons fail to
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No. 80968-7-I and No. 81874-1/34
explain how New Century’s alleged breach of contract in 2007 is attributable to
Deutsche Bank or any of the other Private Defendants.
The Larsons have failed to establish a genuine issue of material fact on any
of their CPA claims against the Private Defendants related to the foreclosure of
their home under the DTA. The trial court thus properly dismissed these claims on
summary judgment.
b. Constitutional Challenges to the DTA
The Larsons alleged several constitutional challenges to the DTA in the
complaint, and the trial court dismissed these arguments on summary judgment.
On appeal, their constitutional arguments can be distilled into four claims: (1) the
DTA’s permissive allowance of nonjudicial foreclosures violates the due process
guarantee of a fair hearing, (2) the 2018 amendments to the DTA impaired the
contractual relationship between the Larsons and their lender, (3) the DTA treads
upon the constitutional original jurisdiction of superior courts, and (4) the DTA’s
shortened statute of limitations for CPA claims is unconstitutional because it grants
unequal privileges and immunities to lenders. 20 We disagree with each of these
arguments and affirm their dismissal.
The Larsons first argue that the DTA is unconstitutional because it gives
corporate trustees the authority to remove property from mortgagors without due
process of law under article I, section 3 of the state constitution. This claim fails
for lack of state action.
A violation of the state due process clause requires state action, whether in
20We rejected the Larsons’ constitutional challenge to the limitation of actions contained in RCW
61.24.127 in section 3(b) of this opinion and will therefore not address the issue again here.
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civil or criminal context. State v. McCullough, 56 Wn. App. 655, 784 P.2d 566,
review denied, 114 Wn.2d 1025 (1990). Our Supreme Court has held that the
legislature’s passage of the DTA constituted “passive involvement” in private
conduct, neither commanding nor forbidding nonjudicial foreclosure, and thus did
not constitute state action, as required to support a due process claim. Kennebec,
Inc. v. Bank of the West, 88 Wn.2d 718, 722-23, 565 P.2d 812 (1977).
The Larsons distinguish their case from Kennebec on the basis that they
“challenge the conduct of the State, . . . the conduct of Snohomish County . . . in
intentionally not complying with their duties under [the Torrens Act], the conduct of
Judge Svaren, . . . and the Sheriff’s threatened eviction of them from their home.”
But the Larsons’ argument blurs their claims against the Public Defendants and
their distinct constitutional arguments, arising out of their contract with private
parties. They do not allege that the Public Defendants deprived them of due
process, but that the DTA and associated mortgage agreements lack adequate
procedural protections. State enforcement of a contract between two private
parties is not state action. State v. Noah, 103 Wn. App. 29, 50, 9 P.3d 858 (2000).
To the extent the Larsons challenge the actions of the Snohomish County
Sheriff in threatening eviction, their claim is similarly unavailing. The mere
acquiescence in the actions of a private contracting party is not sufficient to hold
the government responsible for those actions under the due process clause of the
Fourteenth Amendment to the United States Constitution. Blum v. Yaretsky, 457
U.S. 991, 1004, 102 S. Ct. 2777, 73 L. Ed. 2d 534 (1982) (Medicaid recipients
failed to establish state action in nursing home decision to discharge or transfer to
lower levels of care). The Larsons failed to allege state action to support their due
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process claim.
Even if we were to conclude that nonjudicial foreclosure proceedings under
the DTA do constitute state action, the Larsons still have failed to establish a
deprivation of due process. “The fundamental requirement of due process is the
opportunity to be heard ‘at a meaningful time and in a meaningful manner.’”
Mathews v. Eldridge, 424 U.S. 319, 333, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976)
(quoting Armstrong v. Manzo, 380 U.S. 545, 552, 85 S. Ct. 1187, 1191, 14 L. Ed.
2d 62 (1965)). The level of procedural protection required varies based on
circumstance. Id. at 334. Throughout the foreclosure process, the Larsons had
open access to the courts and the ability to seek an order enjoining the foreclosure.
They chose not to avail themselves of this procedural protection. The Larsons
cannot now complain of a lack of procedural protections they expressly declined
to use.
Next, the Larsons argue that the Private Defendants could not foreclose in
2018 unless they had the legal authority to do so under the laws in effect at the
time the Larsons obtained their loan in 2006. They contend that the state
legislature amended RCW 61.24.030(7)(a) in 2018 to permit a note holder who is
not the “owner” of the deed of trust to foreclose, but this amendment cannot apply
retroactively to the Larsons’ deed of trust without impairing the Larsons’ contract
rights. 21
21RCW 61.24.030(7)(a) requires a trustee, before recording a notice of trustee’s sale, to receive
proof that the beneficiary under the deed of trust is the holder of the promissory note secured by
the deed of trust. A declaration from the beneficiary, made under penalty of perjury, stating that
the beneficiary is the holder of the note “shall be sufficient proof as required under this subsection.”
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Article I, section 23 of the Washington Constitution prohibits the legislature
from passing a law “impairing the obligations of contracts.” Wash. Educ. Ass’n v.
Dep’t Ret. Svcs., 181 Wn.2d 233, 242, 332 P.3d 439 (2014). But the prohibition
against the impairment of contracts is not absolute and cannot be read with “literal
exactness.” Wash. Fed. of State Emps v. State, 127 Wn.2d 544, 560, 901 P.2d
1028 (1995). When the legislature impairs contract rights between private parties,
courts defer to legislative judgment to determine if it was reasonably necessary.
Hous. Auth. of Sunnyside, Wash. v. Sunnyside Valley Irr. Dist., 51 Wn. App. 387,
393, 753 P.2d 1005, 1009 (1988), rev'd on other grounds sub nom. Hous. Auth. of
Sunnyside v. Sunnyside Valley Irr. Dist., 112 Wn. 2d 262, 772 P.2d 473 (1989). In
determining whether a law violates the contracts clause, a court will determine if
state law has operated to substantially impair a contractual relationship, measured
by the degree of destruction of the contractual expectation. Id. (citing Energy
Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 103 S. Ct. 697,
74 L. Ed. 2d 569 (1983)). If so, the state must have a significant and legitimate
public purpose for the regulation such as the remedying of a broad and general
social or economic problem. Id.The Larsons fail to explain how the passage of RCW 61.24.030(7)(a)
substantially impaired their contractual relationship with their lender. It appears
that their argument is premised on the erroneous assumption that New Century
and MERS “split” the note from the deed of trust, a legal argument we have
rejected. And we do not understand how permitting a note holder, such as
Deutsche Bank, to enforce the deed of trust significantly modified any contract
rights the Larsons had when they obtained their home loan in 2006.
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We also reject the Larsons’ assertion that nonjudicial foreclosure sales
violate article IV, section 6 of the state constitution by infringing upon the original
jurisdiction on the superior courts. Article IV, section 6 provides that “[t]he superior
court shall have original jurisdiction in all cases at law which involve the title or
possession of real property.” In Jackson v. Quality Loan Serv. Corp., 186 Wn.
App. 838, 347 P.3d 487 (2015), the plaintiff made the same argument that the
Larsons do here: that the DTA is unconstitutional for giving nongovernmental
actors the authority to determine the result of contractual cases at law which
involve the title and possession of real property, when the exclusive jurisdiction
over such matters is bestowed by article IV, section 6 with the superior courts. The
Jackson court disagreed, reasoning
a nonjudicial foreclosure is not made pursuant to a judgment but
rather is one conducted under a power contained in a mortgage or a
decree of foreclosure. As such, it is made through an agreement
between the grantor and the beneficiary of the deed of trust. The DTA
does not divest the superior court of jurisdiction. Indeed, the superior
court's constitutional grant of jurisdiction is preserved in specific
portions of the DTA. Until a party challenges the foreclosure, there
is no judicial involvement. It is at that point that the superior's court's
jurisdiction is invoked.
Jackson, 186 Wn. App. at 847-48.
The Larsons argue that Jackson is not controlling because its constitutional
analysis was mere dicta and conflicts with other precedents holding that the
legislature may not enact legislation intended to frustrate the jurisdiction of the
superior courts. The Larsons correctly note that the Jackson court rejected the
borrowers’ constitutional challenge based on their failure to notify the state attorney
general of their challenge, as required by RCW 7.24.110. 186 Wn. App. at 846.
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No. 80968-7-I and No. 81874-1/39
Its discussion about the legislature’s authority to enact the DTA is thus dicta. But
Jackson’s constitutional analysis is well-reasoned and we adopt it here.
A superior court has subject matter jurisdiction “where it has authority to
adjudicate the type of controversy involved in the action.” Boudreaux, 10 Wn. App.
2d at 295(quoting In re McDermott, 175 Wn. App. 467 at 480-81). As the Jackson
court explained, a nonjudicial foreclosure is conducted under a specific contractual
agreement made between the borrower and the beneficiary of the deed of trust.
186 Wn. App. at 847. The DTA preserves the superior court’s jurisdiction by giving
a borrower the right to file an action in superior court to restrain the sale, RCW
61.24.130(1), granting the borrower the power to initiate court action, RCW
61.24.040(2), and granting the borrower the right to request a court to decide the
reasonableness of fees a lender demands before reinstating the mortgage. RCW
61.24.090(2). We conclude that the legislature had the authority to enact the DTA
and its enactment does not encroach on the jurisdiction of the superior court.
Summary judgment as to this claim was appropriate.
5. Order Dismissing Torrens Act Proceeding
In August 2020, the Snohomish County Superior Court dismissed the
Larsons’ Torrens Act application on the basis that, after the nonjudicial foreclosure
sale, they were no longer the owners of the property and lacked any interest in the
land to be registered. We affirm this conclusion.
The Torrens Act provides that “[t]he owner of any estate or interest in land,
whether legal or equitable, except unpatented land, may apply as hereinafter
provided to have the title of said land registered.” RCW 65.12.005. Homeowners
who have lost their home in a foreclosure sale are no longer owners of the property
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No. 80968-7-I and No. 81874-1/40
and lack standing to prosecute a title registration action. Matter of Warren, 10 Wn.
App. 2d 596, 599, 448 P.3d 820 (2019). Once the Larsons lost title in the property
in the November 2018 foreclosure sale, they had no statutory right to pursue title
registration. The trial court properly dismissed their Torrens Act application.
6. Denial of Motion to Amend
The Larsons next argue that the trial court erred in denying their motion to
amend their complaint to reallege claims against the Public Defendants and to add
additional State office holders or entities. They contend they had no other way to
obtain a ruling that Snohomish County and its officials were intentionally not
complying with the Torrens Act. We disagree—the Larsons could have remedied
the defect in their Torrens Act petition by filing and recording the abstract of title,
as the superior court ruled when dismissing the claims.
We review the denial of a motion to amend a complaint under a manifest
abuse of discretion standard. McDonald v. State Farm Fire and Cas. Co., 119
Wn.2d 724, 737, 837 P.2d 1000 (1992). Leave to amend “shall be freely given
when justice so requires.” CR 15(a). However, a trial court may consider whether
the new claim is futile. Ino Ino, Inc. v. City of Bellevue, 132 Wn.2d 103, 142, 937
P.2d 154 (1997).
The trial court did not abuse its discretion in concluding that the Larsons’
proposed amendment would be futile. At oral argument, the trial court recognized,
and the Larsons do not dispute, that the proposed amended complaint contained
“the same basic claims, based upon the same basic facts.” The only apparent
difference was the addition of a claim for damages against both Public and Private
Defendants for violations of the Torrens Act. The gravamen of the Larsons’
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No. 80968-7-I and No. 81874-1/41
argument was, once again, that the trial court lacked subject matter jurisdiction to
decide whether their application was defective. Under these circumstances, the
trial court did not abuse its discretion in denying the motion to amend.
7. Recusal
The Larsons next argue that both Judge Svaren and Judge Okrent had an
interest in the outcome of their respective cases and thus erred by failing to recuse
themselves. We disagree.
This court reviews a trial judge’s recusal decision for abuse of discretion.
State v. Gentry, 183 Wn.2d 749, 761, 356 P.3d 714 (2015). A judicial officer “shall
not act as such in a court of which he or she is a member in any . . . action, suit,
or proceeding to which he or she is a party, or in which he or she is directly
interested.” RCW 2.28.030. “Due process, appearance of fairness and Canon
3(D)(1) of the Code of Judicial Conduct require a judge to recuse himself where
there is bias against a party or where impartiality can be questioned.” State v.
Leon, 133 Wn. App. 810, 812, 138 P.3d 159 (2006).
A mere suspicion of partiality may be enough to warrant recusal
because the effect on the public's confidence in our judicial system
can be debilitating. The test for determining whether a judge's
impartiality might reasonably be questioned is an objective test that
assumes that a reasonable person knows and understands all the
relevant facts.
Gentry, 183 Wn.2d at 762 (citations omitted).
The Larsons argue that Judge Svaren, and every other Skagit County
Superior Court judge, should have been precluded from hearing their case
because “judges and other public servants have been unconstitutionally
incentivized to approve foreclosures outside of equity” due to the fact that judges’
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state retirement funds are invested in mortgage-backed securities. They further
argue that Judge Okrent and the Snohomish County judges cannot be considered
impartial because (1) their retirement accounts are invested in mortgage backed
securities, and (2) they have historically failed to comply with their duties under the
Torrens Act. The Larsons offer documents from the Washington State Investment
Board to support its allegation. These arguments are unconvincing for several
reasons.
First, the Larsons appear to argue that there is no judge in either county
who could adjudicate their cases. If true, the rule of necessity defeats their
argument. The rule of necessity is “a well-settled principle at common law that . .
. ‘although a judge had better not, if it can be avoided, take part in the decision of
a case in which he has any personal interest, yet he not only may but must do so
if the case cannot be heard otherwise.’” U.S. v. Will, 449 U.S. 200, 213, 101 S. Ct.
471, 66 L. Ed. 2d 392 (1980) (quoting F. POLLACK, A FIRST BOOK OF JURISPRUDENCE
270 (6th ed. 1929)). The rule “provides for the effective administration of justice
while preventing litigants from using the rules of recusal to destroy what may be
the only tribunal with power to hear a dispute.” Glick v. Edwards, 803 F.3d 505,
509 (9th Cir. 2015). Because the Larsons sought the disqualification of every
judge in both counties where they elected to bring their cases, the recusal of Judge
Svaren and Judge Okrent was not required.
Second, the Larsons failed to establish any personal connection between
Judge Svaren or Judge Okrent and their cases. CJC Canon 3(D) lays out the rules
for when judges should disqualify themselves in a proceeding, for example, when
the judge has a personal bias or prejudice concerning a party, when the judge
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previously served as a lawyer or witness in a controversy, or when the judge’s
family member is or is likely to be a witness in the case. None of these situations
occurred here.
The Larsons’ allegation that judges have a personal interest in retirement
funds invested in mortgage-backed securities and therefore have some interest in
allowing lenders to foreclose is pure speculation. The Larsons have alleged no
facts indicating that either judge has control over the state retirement plans or that
their decisions regarding the Torrens Act will have any impact whatsoever on the
value of securities in which the retirement plans are invested. Without these facts,
there is nothing to support the Larsons’ argument.
Their allegation that Judge Svaren could not rule impartially on a case in
which a party alleges that judges in Snohomish County were violating the Torrens
Act is similarly unsupported in this record. And by the time Judge Okrent dismissed
the Larsons’ Torrens Act petition, the County had rectified the procedural issues
the Larsons had raised in their Skagit County lawsuit. 22 The only issue before
Judge Okrent was whether the Larsons could continue to pursue title registration
after they lost their home in a foreclosure sale. No reasonable person could
conclude that either Judge Svaren or Judge Okrent acted in any way other than
impartially in handling these cases.
8. Transfer of Venue
The Larsons finally argue that trial court erred in transferring venue to
Snohomish County Superior Court. The Larsons argue that RCW 4.12.030
22 According to the Larsons, Snohomish County appointed an examiner of titles in 2019.
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No. 80968-7-I and No. 81874-1/44
requires that venue should have remained with Skagit County Superior Court. We
disagree.
Venue is governed primarily by statute. Ralph v. Weyerhaeuser Co., 187
Wn.2d 326, 338, 386 P.3d 721 (2016). While as a general rule the initial choice of
venue lies with the plaintiff, the plaintiff must choose a venue that is statutorily
authorized. Id. If a plaintiff files in an improper venue and the defendant does not
waive the objection, the defendant has the right to have the matter transferred to
a proper venue. RCW 4.12.030(1). Changing venue under such circumstances is
not discretionary and is reviewed as a matter of law. Ralph, 187 Wn.2d at 338.
Actions relating to the title of real property must be brought in the county in
which the real estate is situated. RCW 4.12.010(1). The Larsons’ complaint
against the Private Defendants was an action relating to the title of real property
because they alleged these defendants had no valid encumbrance on their
property and thus no legal right to conduct a foreclosure sale under various legal
theories. Their lawsuit was an action relating to title of real property. The trial court
correctly concluded a change of venue was legally required under this statute.
The Larsons, however, argue that they were entitled to remain in Skagit
County Superior Court under RCW 4.12.030(2). Under RCW 4.12.030(2), a court
has the discretion to change venue when, among other reasons, “there is a reason
to believe that an impartial trial cannot be had therein.” We review a venue
decision under this section for abuse of discretion. Unger v. Cauchon, 118 Wn.
App. 165, 170, 73 P.3d 1005 (2003). The Larsons argue that an impartial trial
could not be held in Snohomish County because all of the Snohomish County
Superior Court judges had recused themselves from the case. But this issue was
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resolved by appointing Judge Svaren to sit as a visiting judge in Snohomish County
Superior Court. None of the recused judges ruled on the Larsons’ cases. The trial
court’s refusal to set venue in Skagit County Superior Court under RCW
4.12.030(2) was not an abuse of discretion.
9. Attorney Fees
Deutsche Bank requests attorney fees on appeal under RAP 18.1, relying
on paragraph 26 of the deed of trust. This provision provides:
Lender shall be entitled to recover its reasonable attorneys’ fees and
costs in any action or proceeding to construe or enforce any term of
this Security Instrument. The term “attorneys’ fees,” whenever used
in this Security Instrument, shall include without limitation attorneys’
fees incurred by Lender in any bankruptcy proceeding or on appeal.
A lender can recover attorney fees on appeal when the deed of trust allows them
to do so. Edmundson v. Bank of Am., 194 Wn. App. 920, 933, 378 P.3d 272(2016). The Larsons’ complaint sought to invalidate the deed of trust; Deutsche
Bank had to participate in the lawsuit to enforce its terms. For this reason, the
proceeding involved the construction and enforcement of the deed of trust, entitling
Deutsch Bank to an award of attorney fees on appeal. We therefore award
attorney fees to Deutsche Bank conditioned on its compliance with RAP 18.1(d).
Affirmed.
WE CONCUR:
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