Gary Alexander And Diane Alexander, Apps. v. Capital One, N.a., Res.

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
GARY W. ALEXANDER and DIANE M.
ALEXANDER, husband and wife, No. 71952-1-1
(consol. with No. 72350-2-1)
Appellants,
DIVISION ONE
CAPITAL ONE, N.A.; CHEVY CHASE ORDER GRANTING MOTION
BANK, F.S.B.; BISHOP, WHITE, FOR RECONSIDERATION,
MARSHALL & WEIBEL, P.S.; WITHDRAWING OPINION, AND
MORTGAGE ELECTRONIC SUBSTITUTING OPINION
REGISTRATION SYSTEMS, INC., aka
MERS; FIRST AMERICAN TITLE
INSURANCE COMPANY; CHICAGO
TITLE CO.; U.S. BANK, N.A., as
Trustee for Chevy Chase Funding, LLC,
Mortgage-Backed Certificates, Series
2007-2 Trust; CHEVY CHASE
FUNDING LLC, Mortgage-Backed
Certificates, Series 2007-2 Trust;
CREDIT SUISSE SECURITIES (USA),
LLC,
Respondents.
The respondents, Capital One, N.A. and MERS, have filed a motion for
reconsideration of the opinion filed September 21, 2015. Appellants have not
filed a response. The court has determined that said motion should be granted
and that the opinion filed on September 21, 2015 shall be withdrawn and a
substitute unpublished opinion be filed. Now, therefore, it is hereby
ORDERED that the motion for reconsideration is granted; it is further
No. 71952-1-1 (consol. with No. 72350-2-l)/2
ORDERED that the opinion filed on September 21, 2015 is withdrawn and
a substitute unpublished opinion shall be filed.
DATED this JO^day of November, 2015.
* J••^~^V/
forJC&£9-
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-2-
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
GARY W. ALEXANDER and DIANE M.
ALEXANDER, husband and wife, No. 71952-1-1
(consol. with No. 72350-2-1)
Appellants,
DIVISION ONE
CAPITAL ONE, N.A.; CHEVY CHASE UNPUBLISHED OPINION
BANK, F.S.B.; BISHOP, WHITE,
MARSHALL & WEIBEL, P.S.;
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC., aka
MERS; FIRST AMERICAN TITLE
INSURANCE COMPANY; CHICAGO cr
TITLE CO.; U.S. BANK, N.A., as
Trustee for Chevy Chase Funding, LLC,
Mortgage-Backed Certificates, Series «J"-'
2007-2 Trust; CHEVY CHASE
FUNDING LLC, Mortgage-Backed
Certificates, Series 2007-2 Trust;
CREDIT SUISSE SECURITIES (USA),
LLC,
Respondents. FILED: November 30, 2015
Dwyer, J. — Gary and Diane Alexander losttheir property in a nonjudicial
foreclosure sale. They then sued their lender and other entities for wrongful
foreclosure, fraud, negligence, slander oftitle, declaratory relief and violations of
the deeds of trust act (DTA), chapter 61.24 RCW, and the Consumer Protection
Act, chapter 19.86 RCW. The superiorcourt dismissed the Alexanders'
No. 71952-1-1/2 (consol. with No. 72350-2-1)
complaint on summary judgment and awarded respondents attorney fees and
costs under the deed of trust, RCW 4.84.185, and CR 11. We affirm.
I
In March 2007, the Alexanders signed an Adjustable Rate Note (Note)
acknowledging a $3 million loan from Chevy Chase Bank (Chevy Chase) and
promising to pay back that amount plus interest. The note was secured by a
deed of trust on the Alexanders' property. The deed of trust named Mortgage
Electronic Registration Systems, Inc. (MERS) as the beneficiary "acting solely as
a nominee for Lender and Lender's successors and assigns."
In 2009, Chevy Chase merged with Capital One, N.A. (Capital One). In
October of that year, the Alexanders stopped making payments on their loan.
On March 23, 2012, a Capital One employee authorized to sign
documents on behalf of MERS assigned the deed of trust to Capital One. Capital
One then appointed Bishop, White, Marshall &Weibel, P.S. (Bishop White) as
the successor trustee under the deed of trust.
On May 9, 2012, Bishop White sent a notice of default to the Alexanders,
who had not made a loan payment for 32 consecutive months. When the
Alexanders did not cure the default, Bishop White notified them that their
property would be sold at a nonjudicial foreclosure sale.
The Alexanders filed a pro se complaint for wrongful foreclosure but did
not seek to enjoin the sale.
No. 71952-1-1/3 (consol. with No. 72350-2-1)
On November 30, 2012, Capital One purchased the property at the
foreclosure sale and subsequently moved for summary judgment on the
Alexanders' pro se complaint.
In April 2013, attorney J.J. Sandlin advised Capital One's counsel that he
was assisting the Alexanders with their lawsuit, that the Alexanders had filed for
bankruptcy, and that an automatic stay was in effect.
On July 30, 2013, while summary judgment on the Alexanders' pro se suit
was still pending, Sandlin filed a second complaint on behalf of the Alexanders
for wrongful foreclosure, fraud, slander of title, negligence, criminal profiteering,
and violations of the DTA and the Consumer Protection Act. The complaint
alleged, among other things, that the defendants fraudulently manipulated the
nonjudicial foreclosure statute, that the note and deed of trust were securitized,
and that the foreclosing entities were not holders of the original note and lacked
standing to enforce it.
The complaint rested in part on the declarations of two alleged expert
witnesses—Michael Wood and Dr. James Kelley. Wood stated in his declaration
that he was "a mortgage document examiner." He listed his examiner
qualifications as 20 years of experience in the mortgage industry, ownership of a
company called "DocAnalysis," and the fact that he "[sjtudied under" a forensic
document examiner and "had the benefit of his knowledge and guidance for three
years." Wood stated that the Alexanders' loan "was likely" securitized and "likely"
placed "into the Chevy Chase . . . MBS Certificates Series 2007-2" trust. He
No. 71952-1-1/4 (consol. with No. 72350-2-1)
believed the assignment of the deed of trust from MERS to Capital One and the
subsequent appointment of a successor trustee were invalid.
Dr. Kelley described himself as "a computer expert" with a Ph.D. in
electrical and computer engineering. He had 30 years' experience working with
military and commercial computer systems and used "computer graphics" and "a
variety of image-processing technique[s] to test the authenticity of documents."
He alleged that he examined signatures on "scans of documents that purport to
be the [Alexanders'] original loan documents," including the "Construction /
Permanent Loan Note Addendum," "Adjustable Rate Note" and "Prepayment
Penalty Addendum" documents. Kelley concluded the documents were not the
originals.
In August 2013, the Alexanders voluntarily dismissed their pro se
complaint. They later voluntarily dismissed their claims against Bishop White in
their remaining complaint.
Capital One and MERS then moved for summary judgment. They
supported the motion with declarations alleging that Capital One possessed the
original note and that the note had not been securitized. They argued that the
Alexanders lacked admissible evidence to create issues of fact on the
authenticity of the note and whether it had been securitized. Specifically, they
pointed to deficiencies in the qualifications and declarations of Michael Wood and
Dr. Kelley. With respect to Dr. Kelley, they submitted a 2013 federal district court
No. 71952-1-1/5 (consol. with No. 72350-2-1)
ruling declining to pre-qualify him as an expert in forensic document analysis.
The federal court concluded that Dr. Kelley
has no training or education in the area, his experience is extremely
limited, and the sources of his knowledge are mostly unidentified.
In addition plaintiff has yet to establish that Dr. Kelley's
methodology comports with that generally utilized by forensic
document analysts .... Absent a proper foundation for the
admission of his testimony, the Court declines to pre-qualify Dr.
Kelley as an expert in forensic document analysis.
A second federal district court concluded that Dr. Kelley had "no education
or training in handwriting analysis or forensic document examination," that "none
of his prior work experience involved document examination," and that he was
"not qualified to testify as an expert" under Federal Rule of Evidence 702. The
court also concluded that even if Dr. Kelley could be qualified as an expert
witness, there was no evidence that his methodology was reliable or accepted in
the scientific community. Dr. Kelley admitted in a deposition in that case that "his
methods are new and that he is the only expert in this field that he is aware [of]."
The superior court struck the declarations of Wood and Dr. Kelley. The
court concluded that Wood was not qualified as an expert in securitization and
that his declaration was "pure speculation" and legal opinions. The court noted
that Wood's inadmissible speculation that the loan had been securitized in a
specific trust was contradicted by admissible evidence to the contrary. In
addition, the court noted that Wood's declaration was not properly signed and did
not comply with General Rule 30.
No. 71952-1-1/6 (consol. with No. 72350-2-1)
The court also struck Dr. Kelley's first declaration, stating that the
Alexanders "failed to show that [he] qualifies as an expert in forensic document
analysis or that [his] methodology is generally accepted among the relevant
scientific or technical community." The court did not consider a second
declaration from Dr. Kelley filed the day before the summary judgment hearing.
In addition to being untimely, the second declaration was not properly signed and
suffered the same foundational defects that prompted the court to strike Kelley's
first declaration.
The court also implicitly rejected the Alexanders' claim that they were
entitled to an evidentiary "Frye"1 hearing regarding the methodology underlying
Dr. Kelley's opinions. In opposing that claim, Capital One's counsel argued that
the Alexanders had to first meet their burden on summary judgment, and that it
was "within [the court's] discretion to rule on summary judgment that the expert
declaration is not competent.. .." The court implicitly rejected the Alexanders'
position when it granted summary judgment without holding a separate Frye
hearing.
The court ultimately ruled in favor of Capital One and MERS, stating in
part:
So, even when I look at this in the light most favorable to the
nonmoving party, there still needs to be admissible evidence. Here
the admissible evidence leads me to the conclusion that . . .
Capital One ... has the note. Idon't see a basis to make a finding
that it's counterfeit, and I don't see a basis to send this to trial. I'm
granting the summary judgment.
Frve v. United States. 293 F. 1013 (D.C. Cir. 1923).
No. 71952-1-1/7 (consol. with No. 72350-2-1)
The court subsequently awarded respondents $79,865.26 in attorney fees
and costs under CR 11, RCW 4.84.185, and the attorney fee provision in the
deed of trust. The court entered the following pertinent findings and
conclusions:
I. FINDINGS OF FACT
6. Plaintiffs filed their first lawsuit against Capital One and
MERS on November 21, 2012.
7. Plaintiffs were made aware of the fact that Capital One
owned the Note and that the Note had not been securitized when
defendants filed an affidavit of a Capital One representative in
support of their motion for summary judgment in January 2013 in
the 2012 lawsuit.
8. On July 30, 2013, attorney J.J. Sandlin filed the second
lawsuit against defendants on behalf of plaintiffs. The Complaint
included a claim that the DOT was "void and of no further force and
effect," and plaintiffs sought title to the Property. Mr. Sandlin and
plaintiffs ignored the evidence presented in the first lawsuit and
failed to make a reasonable inquiry into whether evidence existed
to rebut the evidence presented by defendants before plaintiffs filed
the second Complaint on July 30, 2013.
10. Throughout both lawsuits, plaintiffs and Mr. Sandlin
conducted no discovery or other meaningful post-filing
investigation.
12. Plaintiffs' opposition to defendants' motion for summary
judgment focused on the opinions oftheir alleged "experts" and on
whether "global assignments" of deeds of trust are valid, even
though Capital One obtained plaintiffs' Loan through a merger and
not an assignment. Plaintiffs made no attempt in their opposition to
establish a prima facie case for any of their seven causes of action,
even though each ofthem was addressed in detail in defendants'
motion.
13. The day before the hearing on defendants' motion for
summary judgment, plaintiffs untimely filed a motion under CR 56(f)
to attempt to delay.
No. 71952-1-1/8 (consol. with No. 72350-2-1)
15. Plaintiffs also filed the following, with the assistance of
their counsel Mr. Sandlin, for the improper purpose of causing
delay:
a. Plaintiffs admitted that they filed for bankruptcy in
order to prevent eviction. They filed for bankruptcy one business
day before the scheduled hearing on defendants' summary
judgment motion, resulting in cancellation of the hearing.
b. Plaintiffs repeatedly claimed that Capital One did not
own the Note and that the Note had been securitized, but made no
investigation and conducted no discovery to determine whether
their claims were correct.
c. Plaintiffs named one expert (Lori Gileno) and
encouraged defendants to incur substantial fees deposing this
expert, only to rely on the opinions of different experts in their
response to summary judgment and label Gileno a "consultant"
during oral argument.
d. Plaintiffs filed a motion for continuance the day before
the hearing on defendants' motion for summary judgment, even
though the purported basis for the motion (the need for the original
DOT) had been apparent for a month.
e. Plaintiffs' summary judgment opposition was based
on experts who were unqualified and engaged in junk science, as
evidenced by the fact that the Court excluded both of plaintiffs'
experts from consideration.
f. Plaintiffs also spent considerable time arguing about
whether the signatures on various original documents were genuine
when, in fact, the plaintiffs admitted in the first lawsuit signing the
Note and they attached a copy to their Verified Complaint, and thus
whether plaintiffs signed the Note was not in dispute and whether
Capital One possessed the original Note was not a material fact.
g. Plaintiffs signed a Warranty Deed and participated in
the recording of numerous fraudulent documents on the title of the
Property in an effort to cloud title and cause delay in the eviction.
Defendants spent substantial time investigating the fraudulent title
documents.
h. Defendants expended time and costs preparing a
Joint Motion voiding the fraudulent title documents pursuant to an
agreement with Mr. Sandlin, but Mr. Sandlin failed to provide
comments on the Joint Motion and it was never filed.
16. Plaintiffs have benefitted from their own delay in an
amount exceeding $900,000 for the four years and seven months
that have elapsed since they defaulted on the Note and have
continued to reside at the Property without making Loan payments.
-8
No. 71952-1-1/9 (consol. with No. 72350-2-1)
II. CONCLUSIONS OF LAW
21. The Complaint was filed by Mr. Sandlin on plaintiffs'
behalf even though the Complaint was not well grounded in fact
because the Note was owned by Capital One and the Loan was not
securitized.
22. . . . [E]ven had the Loan been securitized, securitization
does not discharge a promissory note, invalidate a Deed of Trust or
change the relationship of the parties under Washington law.
25. Mr. Sandlin did not conduct a reasonable inquiry into the
factual and legal basis of the claims in the Complaint, because if he
had he would have known that (1) Capital One owned the Note; (2)
the Note had not been securitized; and (3) even if it had been
securitized, Capital One would still be entitled to enforce the Note.
26. The entirety of plaintiffs' lawsuit against defendants was
frivolous and advanced without reasonable cause because it could
not be supported by any rational argument on the law or facts ....
29. Mr. Sandlin and plaintiffs are hereby sanctioned for filing
the Complaint in violation of CR 11 in the amount of the reasonable
attorneys' fees and costs incurred by defendants.
The court entered judgment for the fees and costs against the Alexanders
and their counsel. The Alexanders appeal.
We review a summary judgment order de novo, engaging in the same
inquiry as the trial court. Lvbbert v. Grant County, 141 Wash. 2d 29, 34, 1 P.3d
1124 (2000). We view the facts and all reasonable inferences therefrom in the
light most favorable to the nonmoving party. Lvbbert, 141 Wash. 2d at 34.
Summary judgment is proper if there are no genuine issues of material fact and
the moving party is entitled to judgment as a matter of law. Lvbbert. 141 Wash. 2d at
34. Mere allegations or conclusory statements of fact unsupported by evidence
No. 71952-1-1/10 (consol. with No. 72350-2-I)
are not sufficient to establish a genuine issue of fact. Baldwin v. Sisters of
Providence in Wash., Inc.. 112 Wash. 2d 127, 132, 769 P.2d 298 (1989). Nor may
the nonmoving party rely on speculation or argumentative assertions that
unresolved factual issues remain. Seven Gables Corp. v. MGM/UA Entm't Co.,
106Wn.2d 1, 13, 721 P.2d 1 (1986).
Initially, we note that the Alexanders' briefon appeal does not comply with
the Rules of Appellate Procedure. Despite the clear requirements of RAP
10.3(a)(5), 10.3(a)(6), and 10.4(f),2 the brief does not contain a single citation to
the record. The record in this appeal contains nearly two thousand pages of
clerk's papers. In these circumstances, counsel's complete failure to cite to the
record is an egregious violation of the rules and is fatal to the appeal. Cowiche
Canyon Conservancy v. Boslev, 118 Wash. 2d 801, 809, 819, 828 P.2d 549
(1992).3
But even ifthe Alexanders had complied with the RAP, their arguments
would not warrant relief. They contend summary judgment was improper
because an issue of fact exists as to whether Capital One had "standing to
nonjudicially foreclose." Specifically, they argue that the declarations of Michael
2RAP 10.3(a)(5) requires references to the record for each factual statement in a party's
statement of the case. RAP 10.3(a)(6) requires arguments "together with citations to legal
authority and references to relevant parts of the record."
3See also Mills v. Park. 67 Wash. 2d 717, 721, 409 P.2d 646 (1966) ("We are not required
to search the record for applicable portions thereof in support of the plaintiffs' arguments.");
Fishburn v. Pierce County Planning & Land Servs. Dep't, 161 Wash. App. 452, 468, 250 P.3d 146
(2011) (courts will not comb the record to find support for appellant's arguments); In re Estate of
Lint, 135Wn.2d 518, 532, 957 P.2d 755 (1998) ("If we were to ignore the rule requiring counsel tc
direct argument to specific findings ... and to cite to relevant parts of the record as support for
that argument, we would be assuming an obligation to comb the record with a view toward
constructing arguments for counsel.... This we will not and should not do.").
10
No. 71952-1-1/11 (consol. with No. 72350-2-I)
Wood and Dr. Kelley4 created fact questions regarding the authenticity of the
note and deed of trust, and that the court erred in declaring their testimony
inadmissible without holding a separate evidentiary hearing. We disagree.
Under the DTA, a trustee must have proof that the beneficiary has the
right to foreclose before it can hold a nonjudicial foreclosure sale. RCW
61.24.030(7)(a). The act provides that "[a] declaration by the beneficiary made
under the penalty of perjury stating that the beneficiary is the actual holder of the
promissory note or other obligation secured by the deed of trust shall be
sufficient proof as required under this subsection." RCW 61.24.030(7)(a). Here,
the record indicates that, prior to foreclosure, the trustee received a beneficiary
declaration from Capital One stating that it was the holder of the Alexanders'
note. And Capital One manager John Baxter stated in his declaration that
Capital One acquired the Alexanders' note and deed of trust when it merged with
the original lender, Chevy Chase, and that "Capital One is the current holder of
the original Note and the Deed of Trust."5 Baxter further stated that the loan
"was never securitized, whether through the Chevy Chase Funding LLC,
4Although the Alexanders also point to the deposition testimony of Lori Gileno, they
never mentioned her testimony in their response to summary judgment and affirmatively
abandoned itat the hearing, telling the court that while they originally "thoughtwe were going to
use [Gileno] as an expert witness," they "went with Michael Wood instead of Lori Gileno because
we felt that... his opinions were more precise and on point." Gileno's declaration is thus not
listed among the documents the court considered on summary judgment.
The Alexanders also point to Gary Alexander's declaration, stating that he "unequivocally
testified that his signature on the purported [original] documents was notan original signature,
because he always signed in blue ink as a business practice .. .." Brief ofAppellant at 3. But no
such allegations appear in the declaration considered by the courton summary judgment.
5 In addition, the Trustee's Deed recited that "Capital One, N.A. being then the holder of
the indebtedness secured by said Deed of Trust, delivered to said Trustee a written request
directing said Trustee to sell the described property
-11 -
No. 71952-1-1/12 (consol. with No. 72350-2-I)
Mortgage-Backed Certificates, Series 2007-2 Trust or through any other
securitization trust." This evidence carried Capital One's initial burden on
summary judgment.
In response, the Alexanders relied on the declarations of Michael Wood
and Dr. Kelley, but the superior court struck their testimony as inadmissible.
Contrary to the Alexanders' assertions, the superior court did not err in striking
the declarations.
Generally, expert testimony is admissible ifthe expert is "'qualified as an
expert by knowledge, skill, experience, training, or education,'"6 relies on
generally accepted theories in the scientific community, and would be helpful to
the trier of fact. Johnston-Forbes v. Matsunaqa, 181 Wash. 2d 346, 352, 333 P.3d
388 (2014) (quoting ER 702). The court "must find that there is an adequate
foundation so that an opinion is not mere speculation, conjecture, or misleading.
It is the proper function of the trial court to scrutinize the expert's underlying
information and determine whether it is sufficient to form an opinion on the
relevant issue. Johnston-Forbes. 181 Wash. 2d at 357. If the expert's opinion rests
on novel scientific evidence, it must also satisfy the Frye standard. State v.
Gregory. 158 Wash. 2d 759, 829-30, 147 P.3d 1201 (2006), overruled on other
6 ER 702 states:
Ifscientific, technical, or other specialized knowledge will assist the trier
of fact to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training, or education, may
testify thereto in the form of an opinion or otherwise.
12
No. 71952-1-1/13 (consol. with No. 72350-2-I)
grounds by State v.W.R., 181 Wash. 2d 757, 336 P.3d 1134 (2014). Expert
testimony is admissible under Frye if:
"(1) the scientific theory or principle upon which the evidence is
based has gained general acceptance in the relevant scientific
community of which it is a part; and (2) there are generally
accepted methods of applying the theory or principle in a manner
capable of producing reliable results."
Lake Chelan Shores Homeowners Ass'n v. St. Paul Fire & Marine Ins. Co., 176
Wash. App. 168, 175, 313 P.3d 408 (2013) (quoting State v. Sipin, 130 Wash. App.
403, 414, 123 P.3d 862 (2005)), review denied, 179 Wash. 2d 1019 (2014). We
review evidentiary rulings made in conjunction with a summary judgment motion
de novo. Taylor v. Bell, 185 Wash. App. 270, 285, 340 P.3d 951 (2014), review
denied, 183 Wash. 2d 1012 (2015).
Wood's and Kelley's declarations simply do not meetthe requirements of
Frye and/or ER 702 and 703. Neither declaration demonstrated the requisite
expert qualifications. Wood's declaration also contained inadmissible
speculation and legal opinions, and Kelley's declaration failed to demonstrate
general acceptance of his methodology in the scientific community. The court
did not err in striking the declarations.
Without citing pertinent authority, the Alexanders contend they were
"entitled to an evidentiary hearing to prove the admissibility of their expert's
testimony." Br. ofAppellant at 12. We need not consider arguments
unsupported by authority. Cowiche Canyon, 118 Wash. 2d at 809. Furthermore,
we recently sustained a summary judgment that was based on the inadmissibility
-13
No. 71952-1-1/14 (consol. with No. 72350-2-I)
of the nonmoving party's expert opinions and that was entered without holding a
Frye hearing. Lake Chelan Shores, 176 Wash. App. at 174-79. In Lake Chelan
Shores, as in this case, the moving party pointed to the absence of evidence
demonstrating the admissibility of expert testimony, and the nonmoving party
failed to produce such evidence. 176 Wash. App. at 179. The superior court did
not err in granting summary judgment without holding a Frye hearing. Cf.
Madura v. BAC Home Loans Servicing, LP, 593 Fed. Appx. 834 (11th Cir. 2014)
(court did not abuse its discretion in denying a hearing on the admissibility of
expert testimony where summary judgment submissions failed to meet the
standards for admissibility on their face).
Next, the Alexanders contend summary judgment was improper because
Capital One "cannot rely upon the 'merger' of Chevy Chase Bankwith [Capital
One] to conclude it is the holder of the original note and [Deed of Trust]." Br. of
Appellant at 7. They argue that "[t]he 'global assignment' of deeds of trust from
Chevy Chase Bank to Capitol One . . . does not logically allow [Capital One] to
assert preemption of the Washington Deeds of Trust Act." Br. of Appellant at 7-
8. This argument is meritless.
Capital One does not allege preemption of the act or reliance on a "global
assignment" of deeds of trust. Rather, Capital One argues, and the Alexanders
do not dispute, that "[a]s a matter of corporate law, Capital One acquired all
rights in the Note when Chevy Chase was merged into Capital One." Br. of
Resp'ts at 17. And more fundamentally, as noted above, Capital One submitted
14
No. 71952-1-1/15 (consol. with No. 72350-2-I)
unrebutted evidence that it possessed the original note when it foreclosed. It
therefore had standing to enforce the note and deed of trust regardless of the
validity of the assignment.7 See Trujillo v. Nw. Trustee Services, Inc., 181 Wn.
App. 484, 496-502, 326 P.3d 768 (2014), reversed in part, 2015 WL 4943982
(Wash. Aug. 20, 2015); In re Butler. 512 B.R. 643, 656 (Bankr. W.D. Wash.
2014) (under the deed of trust act, "a security interest follows the obligation it
secures," and this is true whether the deed of trust was assigned properly or at
all); In re Jacobson, 402 B.R. 359, 367 (Bankr. W.D. Wash. 2009) (holding that
"[i]n Washington, only the holder of the obligation secured by the deed of trust is
entitled to foreclose. . . . '[Transfer of the note carries with it the security, without
any formal assignment or delivery, or even mention of the latter'" (alteration in
original) (quoting Carpenter v. Longan, 83 U.S. 271, 21 L Ed. 313 (1872)));
Ukpoma v. U.S. Bank Nat'l Ass'n. No. 12-CV-0184, 2013 WL 1934172, at *3
7The same reasoning defeats the Alexanders' argument that the document
purporting to assign the deed of trust to Capital One was ineffective because the
assignee, MERS, "did not hold the Alexanders' note, and therefore it had no power to
assign the [deed of trust] even if the assigning 'officer' could be construed to be an agent
of Chevy Chase Bank." Br. of Appellant at 9. Furthermore, Capital One responds, and
the Alexanders do not dispute, that borrowers are third parties to such assignments and
therefore lack standing to challenge them. Borowski v. BNC Mortq.. Inc.. No. C12-5867,
2013 WL 4522253, at *5 (W.D. Wash. Aug. 27, 2013) ("[B]orrowers, as third parties to
the assignment of their mortgage (and securitization process), cannot mount a challenge
to the chain of assignments."); Andrews v. Countrywide Bank. NA, No. C15-0428, 2015
WL 1487093, at *3 (W.D. Wash. April 1, 2015) ("[A] borrower generally lacks standing to
challenge the assignment of its loan documents unless the borrower shows that it is at a
genuine risk of paying the same debt twice."). And even if the Alexanders' had standing
to challenge the assignment, their argument is unavailing because the validity of MERS'
assignment did not depend on whether MERS was the actual holder ofthe note. In Bain
v. Metro. Mortq. Grp.. Inc.. 175Wn.2d 83, 106, 285 P.3d 34 (2012), our Supreme Court
held that because it was "likely true" that "lenders and their assigns are entitled to name
[MERS] as their agent," nothing in Bain "should be construed to suggest an agent cannot
-15-
No. 71952-1-1/16 (consol. with No. 72350-2-I)
(E.D. Wash. May 9, 2013) ("[B]y virtue of being in possession of the note, U.S.
Bank is the lawful owner. Its right to receive payment on the note does not
depend upon any assignment of the note from MERS.").
Last, citing RCW 62A.3-104, the Alexanders contend Capital One was not
"a legitimate 'holder'" of the note because the note was not an unconditional
promise to pay a debt and was therefore not a negotiable instrument. But as
Capital One correctly points out, the note contains a clear promise "to pay Three
Million . . . Dollars ... plus interest." The Alexanders fail to identify a single
condition to that promise in the note. The Alexanders also fail to acknowledge or
apply the criteria for an unconditional promise set forth in RCW 62A.3-106.
Accordingly, their contention fails.
Ill
The Alexanders and their counsel challenge the superior court's award of
$79,865 in attorney's fees and sanctions to Capital One. As noted above, the
court's award rested on three alternative bases: the frivolous action statute, RCW
4.84.185, the attorney fee provision in the deed of trust, and CR 11.8 The
represent the holder of a note." 175 Wash. 2d at 106; Andrews, 2015 WL 1487093, at *3.
("MERS may act as an agent of the note-holder.").
8 CR 11(a) provides in pertinent part:
The signature of a party . . . constitutes a certificate . . . that the party . . .
has read the pleading, motion, or legal memorandum, and that to the best
ofthe party's . . . knowledge, information, and belief, formed after an
inquiry reasonable under the circumstances: (1) it is well grounded in
fact; (2) it is warranted by existing law or a good faith argument for
the extension, modification, or reversal of existing law or the
establishment of new law; (3) it is not interposed for any improper
purpose, such as to harass or to cause unnecessary delay or needless
increase in the cost of litigation .... If a pleading, motion, or legal
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No. 71952-1-1/17 (consol. with No. 72350-2-I)
Alexanders only challenge the court's reliance on CR 11. We review a trial
court's imposition of CR 11 sanctions for abuse of discretion. Wash. State
Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wash. 2d 299, 338-39, 858 P.2d
1054 (1993). The trial court knows the tenor of the litigation and is in the best
position to determine whether facts exist to impose sanctions. Miller v. Badglev.
51 Wash. App. 285, 300-01, 753 P.2d 530 (1988). On the briefing presented, we
cannot say the court abused its discretion.
The portions of the Alexanders' brief pertaining to CR 11 contain no
references to the record and no assignments of error to or discussion of any of
the superior court's many findings and conclusions. The Alexanders also offer
no response to Capital One's extensive arguments and discussion ofthe court's
findings and conclusions. This briefing is inadequate and precludes review.
Norcon Builders. LLC v. GMP Homes VG. LLC. 161 Wash. App. 474, 486, 254
P.3d 835 (2011) ("We will not consider an inadequately briefed argument.");
Donner v. Blue. 187 Wash. App. 51, 65, 347 P.3d 881 (2015) (same).
In any event, the court's unchallenged findings are verities, Humphrey
Indus.. Ltd. v. Clav St. Assocs.. LLC, 176 Wash. 2d 662, 675, 295 P.3d 231 (2013),
memorandum is signed in violation of this rule, the court. . . may impose
upon the person who signed it... an appropriate sanction, which may
include an order to pay to the other party or parties the amount of the
reasonable expenses incurred because of the filing of the pleading,
motion, or legal memorandum, including a reasonable attorney fee.
(Emphasis added.) This rule authorizes sanctions for baseless filings orfilings made for
an improper purpose. Brvant v. Joseph Tree. Inc.. 119 Wash. 2d 210, 219-20, 829 P.2d
1099(1992).
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No. 71952-1-1/18 (consol. with No. 72350-2-I)
and those findings support the court's conclusions of law.9 In addition, the
Alexanders' principal argument against CR 11 sanctions—i.e., that they
reasonably relied on their "experts" opinions—ignores the glaring deficiencies in
the experts' qualifications and declarations.
The Alexanders fail to demonstrate that the court abused its discretion in
imposing sanctions under CR 11.
Subject to their compliance with RAP 18.1, we grant Capital One's and
MERS's request for attorney fees and costs on appeal under the fee provision in
the deed of trust.
Affirmed.
We concur:
9While the Alexanders argue that courts "should not consider Rule 11 sanctions
if an applicable and appropriate remedy is available by statute or under other Rules,"
they cite no authority supporting that proposition. Br. ofAppellant at 17. We need not
consider arguments that are not supported by authority. Cowiche Canyon, 118Wn.2d at
809.
18