Deutsche Bank Trust Company Americas, V Albert E. Avalo ( 2016 )


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  •      IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
    DEUTSCHE BANK TRUST COMPANY
    AMERICAS AS INDENTURE                        No. 75695-8-1
    TRUSTEE FOR THE REGISTERED
    HOLDERS OF SAXON ASSET                       DIVISION ONE
    SECURITIES TRUST 2005-1
    MORTGAGE LOAN ASSET BACKED
    NOTES, SERIES 2005-1,
    Respondents,
    UNPUBLISHED OPINION
    V.
    ALBERTO E. AVALO; VICTORIA L.
    AVALO,
    Appellants,
    WELLS FARGO FINANCIAL
    WASHINGTON 1, INC.; ALSO ALL
    PERSONS OR PARTIES UNKNOWN
    CLAIMING ANY RIGHT, TITLE, LIEN,
    OR INTEREST IN THE PROPERTY
    DESCRIBED IN THE COMPLAINT
    HEREIN,
    FILED: November 14, 2016
    Defendants.
    LEACH, J. — Alberto and Victoria Avalo appeal the summary judgment
    entered in favor of Deutsche Bank Trust Company Americas. After the Avalos
    defaulted on a loan, Deutsche Bank commenced a judicial foreclosure. The Avalos
    claim that questions of fact exist about Deutsche Bank's authority to foreclose.
    However, as holder of the note, Deutsche Bank had the authority to enforce the
    No. 75695-8-1 /2
    note and commence judicial foreclosure of the deed of trust. Because no
    questions of fact exist as to any issue material to the judgment, we affirm.
    BACKGROUND
    In December 2004, the Avalos signed a promissory note in the amount of
    $388,218 for a loan from Saxon Mortgage Inc. A deed of trust encumbering the
    Avalos' property secured the loan. Saxon endorsed the note to Deutsche Bank.
    Assignment of the deed of trust to Deutsche Bank was recorded on June 25, 2010.
    The Avalos defaulted on their loan and, in May 2009, entered into a loan
    modification agreement with Deutsche Bank. In July 2011, the Avalos again
    stopped making payments on their loan. In response, the loan servicer sent a
    notice of default to the Avalos. This notice told the Avalos that to cure default they
    needed to pay $9,621.12 by August 9, 2011. The Avalos failed to cure the default.
    Deutsche Bank filed an action to enforce the note and foreclose the deed of trust.
    Deutsche Bank moved for summary judgment. Deutsche Bank supported
    its motion with an affidavit attesting to its possession of the note and beneficial
    interest in the deed of trust. At the summary judgment hearing, Deutsche Bank
    also produced the original promissory note. In opposition to the summary
    judgment motion, the Avalos submitted a document called "Chain of Title Analysis
    & Mortgage Fraud Investigation" (chain of title analysis) prepared for the Avalos by
    a company called Mortgage Compliance Investigators (MCI). The chain of title
    analysis summarized MCI's forensic audit of the Avalos' individual mortgage.
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    No. 75695-8-1/ 3
    The trial court granted summary judgment to Deutsche Bank. The Avalos
    appeal.
    DISCUSSION
    Standard of Review
    We review an order granting summary judgment de novo, performing the
    same inquiry as the trial court) The initial burden is on the moving party to show
    no genuine issue of fact exists.2 The burden then shifts to the nonmoving party to
    "set forth specific facts to rebut the moving party's contentions and show that a
    genuine issue as to a material fact exists."3 A material fact is one on which the
    outcome of the litigation depends.4 "The nonmoving party must set forth specific
    facts showing a genuine issue and cannot rest on mere allegations."5 Summary
    judgment is appropriate when, taking all facts and reasonable inferences in the
    light most favorable to the nonmoving party, no genuine issue of material fact
    exists and the moving party is entitled to judgment as a matter of law.6
    1 Hayden   v. Mut. of Enumclaw Ins. Co., 
    141 Wash. 2d 55
    , 63-64, 
    1 P.3d 1167
    (2000).
    2 Deutsche Bank Nat'l Tr. Co. v. Slotke, 
    192 Wash. App. 166
    , 171, 
    367 P.3d 600
    , review denied, 
    185 Wash. 2d 1037
    (2016).
    3 Allard v. Bd. of Regents of Univ. of Wash., 
    25 Wash. App. 243
    , 247, 
    606 P.2d 280
    (1980).
    4 Greater Harbor 2000 v. City of Seattle, 
    132 Wash. 2d 267
    , 279, 
    937 P.2d 1082
    (1997).
    5 Baldwin v. Sisters of Providence in Wash., Inc., 
    112 Wash. 2d 127
    , 132, 
    769 P.2d 298
    (1989).
    
    6 Wilson v
    . Steinbach, 
    98 Wash. 2d 434
    , 437, 
    656 P.2d 1030
    (1982).
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    No. 75695-8-1/ 4
    Summary Judgment
    First, we address the Avalos' claim that the trial court committed evidentiary
    error. The Avalos contend that the trial court should not have considered the
    affidavit of Nicole Boutin and the attached business records because she did not
    demonstrate personal knowledge as required by CR 56(e).7 However, the trial
    court could not have considered this affidavit at summary judgment because it was
    not part of the record when the court granted the motion. The trial court granted
    summary judgment on February 13, 2015. Deutsche Bank submitted the Boutin
    affidavit on May 4, 2015, in support of its motion for entry of judgment and decree
    of foreclosure. Because this affidavit was submitted to the court after the court
    decided the summary judgment motion, it could not have influenced the court's
    decision on the motion.
    Next, we consider the Avalos' contention that a question of fact exists as to
    Deutsche Bank's authority to enforce the note and deed of trust. Washington law
    is clear: the holder of an instrument is entitled to enforce that instrument.8
    Deutsche Bank submitted undisputed evidence that it was the holder of the note.
    While the Avalos deny that Deutsche Bank was the holder of the note, they have
    submitted no evidence to contradict Deutsche Bank's evidence. The Avalos claim
    that the chain of title analysis creates an issue of disputed fact. But it does not
    7See Barkley v. GreenPoint Mortg. Funding, Inc., 
    190 Wash. App. 58
    , 67, 
    358 P.3d 1204
    (2015), review denied, 
    184 Wash. 2d 1036
    (2016).
    8 RCW 62A.3-301; Brown v. Dep't of Commerce, 
    184 Wash. 2d 509
    , 524-25,
    
    359 P.3d 771
    (2015); Bain v. Metro. Mortg. Grp., Inc., 
    175 Wash. 2d 83
    , 104, 
    285 P.3d 34
    (2012).
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    No. 75695-8-1 / 5
    because the analysis does not dispute that Deutsche Bank was the holder of the
    note, the only relevant fact about Deutsche Bank's authority to foreclose. Thus,
    under well-established Washington law, Deutsche Bank was entitled to enforce the
    note.
    The Avalos challenge Washington law, asserting that how a note is acquired
    is also relevant. They contend that Deutsche Bank is not entitled to enforce the
    note unless it has established its chain of title. They contend that the holding of
    Bain v. Metropolitan Mortqaqe Group, Inc.9 and other Washington case law—that
    the security follows the holder of the note—should not apply in cases of fraud and
    "egregious errors," including breaks in the chain of title. They rely on RCW
    65.08.070 for the proposition that holder status must be proved with evidence of a
    legitimate delivery. But the Avalos misunderstand the significance of this law.
    RCW 65.08.070, Washington's recording act, "make[s] the deed first recorded
    superior to any outstanding unrecorded conveyance of the same property unless
    the mortgagee or purchaser had actual knowledge of the transfer not filed of
    record.'"1° This statute does not require that a note be recorded before the holder
    of that note can enforce it. Washington law requires only that Deutsche Bank
    currently holds the note.11 Therefore, the Avalos' chain of title evidence has no
    relevance to Deutsche Bank's authority to initiate foreclosure. Undisputed
    9 
    175 Wash. 2d 83
    , 
    285 P.3d 34
    (2012).
    10 Hu Hyun Kim v. Lee, 
    145 Wash. 2d 79
    , 86, 
    31 P.3d 665
    (2001) (quoting
    Tacoma Hotel, Inc. v. Morrison & Co., 
    193 Wash. 134
    , 140,74 P.2d 1003 (1938)).
    11 
    Bain, 175 Wash. 2d at 102-04
    .
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    evidence shows that the trial court properly granted summary judgment in favor of
    Deutsche Bank.
    Discovery
    The Avalos contend that the trial court should have allowed them to conduct
    additional discovery before ruling on Deutsche Bank's summary judgment motion.
    Delaying a motion hearing to permit a party to conduct further discovery may be
    appropriate where "'the party cannot present by affidavit facts essential to justify
    the party's opposition.'"12 But if the party opposing the motion cannot show that it
    is likely to discover evidence that would create an issue of fact, the court is not
    required to delay the summary judgment hearing.13 We review a trial court's
    decision to grant or deny a request for a continuance to conduct discovery for
    abuse of discretion.14
    Here, the Avalos requested additional time to conduct discovery. The trial
    court delayed the summary judgment hearing for nearly a month to give the Avalos
    time to respond to Deutsche Bank's motion. This gave them time to obtain the
    chain of title analysis that they submitted with their amended opposition to
    summary judgment on February 9. The trial court refused to continue the hearing
    further because it concluded that the Avalos had not identified what additional
    evidence they hoped to discover.15 The Avalos claim they needed additional
    12 MRC Receivables Corp. v. Zion, 
    152 Wash. App. 625
    , 628-29, 
    218 P.3d 621
    (2009) (quoting CR 56(f)).
    13 Turner v. Kohler, 
    54 Wash. App. 688
    , 693, 
    775 P.2d 474
    (1989).
    14 MRC Receivables 
    Corp., 152 Wash. App. at 629
    .
    15 The Avalos contend that what evidence they hoped to discover was
    apparent from the chain of title analysis attached to their opposition to the summary
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    No. 75695-8-1/ 7
    discovery in order to support the conclusions of the chain of title analysis and
    present evidence of breaks in the chain of title. They claim that their discovery
    requests could have asked Deutsche Bank to explain these alleged breaks in the
    chain of title and provide details about "the nature of the transaction." As discussed
    above, the trial court properly concluded that information contained in the chain of
    title analysis was not relevant. Thus, discovery to confirm the conclusions of this
    document would not create an issue of fact. The trial court did not abuse its
    discretion by denying the Avalos addition time for discovery.
    CR 54(e) Violation
    The Avalos contend that the trial court should have required Deutsche Bank
    to refile its motion because it presented the court with a proposed order too late to
    satisfy the rules. CR 54(e) requires the attorney for the prevailing party to "prepare
    and present a proposed form of order or judgment not later than 15 days after the
    entry of the verdict or decision, or at any other time as the court may direct." The
    trial court granted summary judgment on February 13, 2015. Deutsche Bank did
    not present the court with a proposed order until May 4, 2015, nearly three months
    later.
    Deutsche Bank does not dispute the delay but contends that the remedy for
    this error is not reversal. CR 54(e) provides a remedy when the prevailing party
    does not present a proposed order in a timely manner: "any other party may do
    judgment motion, but they do not reference specific evidence that would create an
    issue of fact.
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    No. 75695-8-1 / 8
    so." When Deutsche Bank did not submit a timely proposed order, the Avalos were
    free to submit their own proposed order. But they did not.
    Further, judgments entered in spite of procedural error are valid unless the
    complaining party shows resulting prejudice.16 A party is not prejudiced if it is able
    to timely appeal and argue any issues it wishes to raise.17 Under this standard,
    the Avalos do not show prejudice.
    Attorney Fees
    Deutsche Bank requests an award of costs and fees as the prevailing party
    based on RCW 4.84.330 and RAP 18.1. RAP 18.1 allows this court to award
    attorney fees when applicable law authorizes them. "RCW 4.84.330 permits a
    party to recover reasonable attorney fees and costs in any action on a contract
    where the contract provides for this award."18 Here, the deed of trust 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."
    Because the deed of trust authorizes a fee award and Deutsche Bank is the
    prevailing party, we award reasonable attorney fees and costs on appeal, subject
    to its compliance with RAP 18.1.
    16Burton v. Ascol, 
    105 Wash. 2d 344
    , 352, 
    715 P.2d 110
    (1986) ("A judgment
    entered without the notice required by CR 54(f)(2) is not invalid, however, where
    the complaining party shows no resulting prejudice.").
    17 
    Burton, 105 Wash. 2d at 352-53
    .
    18 
    Slotke, 192 Wash. App. at 179
    .
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    No. 75695-8-1/ 9
    CONCLUSION
    The Avalos have not demonstrated, the existence of any genuine issue of
    material fact relevant to Deutsch Bank's authority to foreclose. Accordingly, we
    affirm.
    WE CONCUR:
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