Maxim Lissak v. U.s. Bank National Association

FILED
COURT OF APP7ALS
kJi vISIO)N j"
2015 JUL - 7 AIM 8: 4 6
IN THE COURT OF APPEALS OF THE STATE OF W
DIVISION II
U. S. BANK NATIONAL ASSOCIATION, AS No. 46,'
TRUSTEE FOR LEHMAN BROTHERS
SMALL BALANCE COMMERCIAL
MORTGAGE PASS- THROUGH
CERTIFICATES, SERIES 2007- 3, a national
association,
Respondent, UNPUBLISHED OPINION
ori
MAXIM LISSAK, an individual,
Appellant,
VICTORY STATE LLC,,a Washington limited
liability company; JOHN DOES 1 through 10,
inclusive, and ROES 1 through 10, inclusive,
Defendants.
SUTTON, J. — Maxim Lissak appeals the superior court' s order granting U.S. Bank
National Association' s ( U. S. Bank) motion to dismiss his counterclaims for declaratory judgment
arising out of a judicial foreclosure initiated against him by U.S. Bank. He argues that the superior
court erred in dismissing his counterclaims because he presented a " justiciable controversy" under
the Uniform Declaratory Judgments Act, chapter 7. 24 RCW ( UDJA) and that the superior court
violated his right to a jury trial. Because the superior court lacked jurisdiction under the UDJA to
grant Lissak the relief he sought and because Lissak never stated a claim under which he could
No. 46293 -1 - II
prevail at trial, the superior court properly dismissed his counterclaims and properly concluded
that he has no right to a jury trial on' his counterclaims. We affirm.
FACTS
On or about March 27, 2007, Lissak borrowed $333, 500.00 ( the loan.), evidenced by a Deed
of Trust, listing U. S. Bank as the loan beneficiary and the holder of the underlying promissory
note. On April 1, 2012, Lissak defaulted on the loan by failing to make an installment payment
when due; he also failed to make all subsequent payments. U. S. Bank filed a judicial foreclosure
lawsuit to obtain a judgment to sell the property at a sheriff' s sale.
In response, Lissak filed a denial to U. S. Bank' s lawsuit with affirmative defenses and
counterclaims for declaratory judgment under the UDJA. He alleged..that ( 1) he informed U. S.
Bank that he wanted to be considered for a loan modification, ( 2) U.S. Bank informed him that
only delinquent borrowers are considered for loan modifications, ( 3) Lissak was informed that he
should default on his loan to be considered for a modification, ( 4), he defaulted on his loan, ( 5)
U.S. Bank failed to consider him for a loan modification, and ( 6) that he " fully followed [ U.S.
Bank' s] advice in expectation that [ U.S. Bank] would offer to him [ a] loan modification." Clerk' s
Papers ( CP) at 83. Lissak requested that the superior court enter a declaratory judgment on his
right to a loan modification under the UDJA, alleging that:
A true and justiciable controversy exists between Defendant Lissak and
Plaintiff U.S. Bank National Association regarding Defendant' s rights to loan
modification. Adjudication of this controversy by this Court would definitively
resolve the controversy.
A true and justiciable controversy exists between Defendant Lissak and
Plaintiff U. S. Bank National Association regarding Defendant' s rights based on
representations made by the Plaintiffs representatives with relation to loan
2
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modification and Defendant' s reliance on such representations. Adjudication of
this controversy by this Court would definitively resolve the controversy.
CP at 84- 85. U. S. Bank moved to dismiss under CR, 12( b)( 6).
The superior court granted U. S. Bank' s motion to dismiss under CR 12( b)( 6). Lissak
appeals.
ANALYSIS
Lissak argues that ( 1) the superior court erred in ruling that it lacked jurisdiction, (2) he
properly pled his counterclaims for declaratory judgment under the UDJA, and ( 3) the superior
court denied him his right to a jury trial when it dismissed his counterclaims. We disagree.
I. SUPERIOR COURT' S UDJA JURISDICTION
We review de novo a on a motion to dismiss a claim under CR 12( b)( 6). Gorman v.
ruling
City of Woodinville, 175 Wash. 2d 68, 71, 283 P.3d 1082 ( 2014). The superior court properly
dismisses a complaint only if the complaint alleges no facts that would justify recovery. Gorman,
175 Wash. 2d at 71. We presume the plaintiff' s allegations to be true, and we draw all reasonable
inferences from those facts in the plaintiff' s favor. Gorman, 175 Wash. 2d at 71. " The UDJA `is
designed to settle and afford relief from insecurity and uncertainty with respect to rights, status
and other legal relations"' and we construe it liberally. Pasado' s Safe Haven v. State, 162 Wn.
App. 746; 759, 259 P.3d 280 ( 2011) ( quoting DiNino v. State, 102 Wash. 2d 327, 330, 684 P.2d 1297
1984)); RCW 7. 24. 120. The UDJA provides:
A person interested under a deed, will, written contract or other writings
constituting a contract, or whose rights, status or other legal relations are affected
by a statute, municipal ordinance, contract or franchise, may have determined any
question of construction or validity arising under the instrument, statute, ordinance,
contract or franchise and obtain a declaration of rights, status or other legal relations
thereunder.
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RCW 7.24. 020. CR 57, which governs declaratory judgments in civil cases, provides in pertinent
part:
The procedure for obtaining a declaratory judgment pursuant to the Uniform
Declaratory Judgments Act, RCW 7. 24, shall be in accordance with these rules, and
the right to trial by jury may be demanded under the circumstances and in the
manner provided in rules 38 and 39. The existence of another adequate remedy
does not preclude a judgment for declaratory relief in cases where it is appropriate.
Lissak argues that his counterclaims fall within the UDJA because he and U. S. Bank " need
to know their rights and liabilities under the U. S. Bank' s loan modification process." Br. of
Appellant at 9. Because Lissak does not seek to resolve a " question of construction or validity"
of a contract, we hold that he does not have a justiciable controversy under the UDJA. RCW
7. 24. 020.
Under the UDJA, a person whose rights, status, or other legal relations are affected by a
contract may present a " question of construction or validity arising under the ... contract,"
so long
as the UDJA' s underlying requirements are met. RCW 7. 24. 020; see Branson v. Port ofSeattle,
152 Wash. 2d 862, 877, 101 P.3d 67 ( 2004). To seek declaratory judgment under the UDJA, a person
must present a " justiciable controversy." Branson, 152 Wash. 2d at 877. " Absent issues of major
public importance, ... a `justiciable controversy' must exist before a court' s jurisdiction may be
invoked under the [ UDJA]." DiNino, 102 Wash. 2d at 330 ( quoting Diversified Indus. Dev. Corp. v.
Ripley, 82 Wash. 2d 811, 815, 514 P.2d 137 ( 1973)). A "justiciable controversy" requires all four of
the following elements:
1) ... an actual, present and existing dispute, or the mature seeds of one, as
distinguished from a possible, dormant, hypothetical, speculative, or moot
disagreement, ( 2) between parties having genuine and opposing interests, ( 3) which
involves interests that must be direct and substantial, rather than potential,
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No. 46293 - 1 - II
theoretical, abstract or academic, and ( 4) a judicial determination of which will be
final and conclusive."
Pasado' s Safe Haven, 162 Wn. App. at 761 ( alteration in original) ( quoting DiNino, 102 Wash. 2d at
330- 31). Under the UDJA, a court may not add terms to the contract or write a new contract
because:
courts do not have the power, under the guise of interpretation, to rewrite contracts
the parties havedeliberately made for themselves[, and they] ... may not interfere
with the freedom of contract or substitute their judgment for that of the parties to
rewrite the contract.
McCormick v. Dunn & Black, P.S., 140 Wash. App. 873, 891- 92, 167 P.3d 610 ( 2007).
Lissak fails to establish a justiciable controversy because he does not dispute the
construction or validity of his contract with U.S. Bank upon which U. S. Bank initiated judicial
foreclosure proceedings, and because his claims are based on purported statements made by U.S.
Bank representatives, upon which he apparently seeks to contractually bind U. S. Bank to consider
him for a loan modification. But he presents neither evidence of a contract, nor any basis for
requiring U. S. Bank to modify his loan. Nor does he plead the existence of an agreement with
U.S. Bank to modify his loan; their contract is the Deed of Trust, which requires Lissak to make
payments under the terms of the promissory note, and under which U. S. Bank may foreclose upon
Lissak' s default.' Lissak fails to show that this contract required U. S. Bank to modify his loan or
See CP at If an [ e] vent of [d] efault has occurred and is continuing, Lender shall have the
11, 25 ("
remedies of a secured party under the Uniform Commercial Code, in addition to all remedies
provided by this Instrument or existing under applicable law."), CP at 27 (" If an [ e] vent of [d] efault
has occurred and is continuing, Lender may, regardless of the adequacy of Lender' s security or the
solvency of Borrower and even in the absence of waste, enter upon and take and maintain full
control of the Mortgaged Property"), CP at 46 ( the " failure by Borrower to pay or deposit when
due any amount required by the Note, this Instrument, or any other Loan Document" triggers
default).
No. 46293 -1 - II
to even consider a loan modification. If the superior court would have elected to interpret such a
provision into the contract, it would have rewritten the contract by adding language to which the
parties never agreed, thereby exceeding its jurisdiction under the UDJA. See McCormick, 140
Wash. App. at 891; see also In re Marriage ofMudgett, 41 Wash. App. 337, 341, 704 P.2d 169 ( 1985)
holding that, under the UDJA, a court is not.permitted to add new terms to a contract or rewrite a
contract).
Because Lissak fails to present evidence of a contract between him and U.S. Bank for the
right to a loan modification, his argument is, at best, relegated to the parties' rights and liabilities
under a potential contract. Accordingly, Lissak' s dispute is merely "` possible, ... hypothetical,
or] speculative,"' and is not a justiciable controversy for the superior court. Pasado' s Safe Haven,
162 Wn. App. at 761 ( quoting DiNino, 102 Wash. 2d at 330- 31). Because his counterclaims for
declaratory judgment do not satisfy all four elements to present a justiciable controversy, the
superior court properly granted U. S. Bank' s CR 12( b)( 6) motion and dismissed his counterclaims.2
2 Lissak also argues that the superior court erred in ignoring his pleadings and misinterpreting his
arguments, and that the court treated his counterclaims for declaratory judgment as a request for
the court to modify his loan rather than a request to decide his right to be considered for a loan
modification. Because Lissak' s request would revise or create contractual obligations in the Deed
of Trust between him and U. S. Bank, the superior court properly held that " ordering a loan
modification would amount to creating a new contract or altering an existing one," and thus " the
court lacks jurisdiction under the [ UDJA] to provide the relief sought by [ Lissak]." CP at 106
citing Mudgett, 41 Wn. App. at 341). We see no misinterpretation of Lissak' s counterclaims; he
sought relief that went beyond a question of validity or construction of the contract already in place
between Lissak and U. S. Bank. Lissak' s request was thus outside the scope of the UDJA and the
superior court correctly dismissed his counterclaims.
M
No. 46293 -1 - II
II. JURY TRIAL RIGHT
Lissak also argues that the superior court violated his right to a jury trial by granting U.S.
Bank' s motion to dismiss. See WASH. CONST. art. I, § 21 (" The right of trial by jury shall remain
inviolate."). But because he fails to show a " justiciable controversy" for his counterclaims and he
cannot prevail at trial, there is no right to a jury trial. McCormick, 140 Wash. App. at 891 ( court
may exercise jurisdiction only over justiciable controversies); see also Sudar v. Dep' t of Fish &
Wildlife Comm' n, Wn. App. , 347 P.3d 1090, 1096 ( 2015) (" The trial court may grant a
CR 12( b)( 6) motion when no facts exist that would justify recovery," such as when there is no
justiciable controversy.). And he cites no other factual support or legal authority for his statement
that the superior court violated his right to a jury trial, thus we need not address his argument
further.3
Because the superior court lacked jurisdiction under the UDJA to grant Lissak the relief he
sought4 and because Lissak never stated a claim under which he could prevail at trial, the superior
court properly dismissed his counterclaims and properly concluded that he has no right to a trial
3
RAP 10. 3( a)( 6) requires the appellant' s brief to include " argument in support of the issues
presented for review, together with citations to legal authority and references to relevant parts of
the record."
4 We do not decide whether Lissak may have other remedies available to him.
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on his counterclaims. We affirm.
A majority of the panel having determined that this opinion will not be printed in the
Washington Appellate Reports, but will be filed for public record in accordance with RCW 2. 06.040,
it is so ordered.
SUTTON, 7.
We concur:
HSON, CC.T. -