Pauline Louise Conner v. Everhome Mortgage Company

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
PAULINE LOUISE CONNER,
No. 74050-4-1
Appellant,
DIVISION ONE
v.
EVERHOME MORTGAGE COMPANY, UNPUBLISHED OPINION
a division of EVERBANK, and
EVERBANK, REGIONAL TRUSTEE
SERVICES, MORTGAGE
ELECTRONIC REGISTRATION
SYSTEMS, INC., a/k/a MERSCORP,
FEDERAL NATIONAL MORTGAGE
ASSOCIATION, LENDER
PROCESSING SERVICES,
DOES l-XXX, INCLUSIVE,
Respondents. FILED: November 21, 2016
Leach, J. — Pauline Conner challenges the summary judgment dismissal
of her lawsuit against Everhome Mortgage Company (now EverBank),1 Mortgage
Electronic Registration Systems Inc. (MERS), and Federal National Mortgage
Association (Fannie Mae). After Conner defaulted on a loan, EverBank started
nonjudicial foreclosure proceedings against her home. Conner then filed a
lawsuit asserting various causes of action based on alleged violations of the
1 In July 2011, Everhome Mortgage Company merged with EverBank with
the surviving successor being EverBank. Both names are used throughout the
briefing and record, but the entities are the same for purposes of this dispute.
For consistency with the trial court order, we use "EverBank."
No. 74050-4-1 / 2
deeds of trust act (DTA)2 and Consumer Protection Act (CPA)3. She claims
genuine issues of material fact prevent dismissal of these claims. She also
challenges certain trial court evidence rulings and the denial of her request for a
continuance of the summary judgment hearing.
Because Conner does not dispute that she defaulted on her loan and did
not restrain the foreclosure sale, she fails to raise an issue of fact about her
waiver of most of her DTA claims. Because the respondents did not owe Conner
a duty of good faith, the trial court properly dismissed Conner's good faith claim
against them. And because Conner does not provide facts to support the
causation element of her CPA claim, the trial court properly dismissed the claim.
For these reasons, we affirm.
FACTS
In May 2006, Irwin Mortgage Corporation (IMC) loaned Pauline Conner
$279,000 evidenced by a promissory note. A deed of trust (DOT) encumbering
Conner's home secured the note. The DOT named MERS as its beneficiary.
MERS never owned or possessed the promissory note.
IMC endorsed the note in blank and sold it to Fannie Mae. Fannie Mae
delivered the note to EverBank to allow EverBank to service it for Fannie Mae.
EverBank maintained continuous physical possession of the original note.
2Ch. 61.24RCW.
3Ch. 19.86 RCW.
No. 74050-4-1 / 3
Conner defaulted on the loan in May 2009. EverBank notified Conner of
her default and an imminent referral to foreclosure. Conner did not cure her
default. On August 31, 2009, EverBank referred the loan for foreclosure.
In September 2009, MERS executed an assignment of the DOT,
purporting to assign to EverBank all beneficial interest under the DOT.
On September 18, 2009, Regional Trustee Services sent Conner a notice
of default, signed as "Trustee and/or Agent for the Beneficiary." EverBank
appointed Regional Trustee as successor trustee, providing it with a notarized
affidavit of possession indicating that EverBank possessed the note. On October
20, 2009, Regional Trustee recorded EverBank's appointment of successor
trustee appointing Regional Trustee as successor trustee. The same day
Regional Trustee also recorded a notice of trustee sale and sent it and a notice
of foreclosure to Conner.
The notice of foreclosure scheduled a public action of Conner's home for
January 22, 2010. Regional Trustee continued the sale to April 16, 2010.
Conner did not attempt to enjoin the sale. Fannie Mae purchased the property at
the April 16 trustee's sale. When Conner did not move out, Fannie Mae started
an eviction action, which the court stayed pending the outcome of this lawsuit.
Conner filed this lawsuit on February 13, 2012, naming EverBank,
Regional Trustee, MERS, and Fannie Mae as defendants. On July 9, 2015,
No. 74050-4-1 / 4
respondents EverBank, MERS, and Fannie Mae moved for summary judgment
seeking dismissal of all claims against them. Regional Trustee had entered
receivership and was not a party to the summary judgment proceeding. On
August 4, 2015, Conner moved for a continuance to allow her to conduct
discovery on specific questions related to ownership and possession of her
promissory note. The trial court denied Conner's CR 56(f) motion and granted
respondents' motion for summary judgment, dismissing all of Conner's claims.
Conner appealed.
STANDARD OF REVIEW
We review an order granting summary judgment de novo.4 Summary
judgment is appropriate when, viewing 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.5 We
consider the same evidence that the trial court considered on summary
judgment.6 But we may affirm the trial court ruling on any ground supported by
the record.7
4 Havden v. Mut. of Enumclaw Ins. Co.. 141 Wn.2d 55, 63-64, 1 P.3d 1167(2000).
5 Lvbbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000).
6 Lvbbert. 141 Wn.2d at 34.
7 King County v. Seawest Inv. Assocs., 141 Wn. App. 304, 310, 170 P.3d
53 (2007).
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No. 74050-4-1 / 5
ANALYSIS
Declarations of Lee and Kaufman
Conner asserts that the trial court should not have considered declarations
and related business records about Regional Trustee and EverBank's actions in
connection with the foreclosure. We review a trial court's decision to admit or
exclude evidence in a summary judgment proceeding de novo.8
First, Conner contends that the declarations of Bradley Lee and Deborah
Kaufman did not show that they had sufficient personal knowledge of the facts
stated in the declarations. CR 56(e) requires that "[supporting and opposing
affidavits shall be made on personal knowledge, shall set forth such facts as
would be admissible in evidence, and shall show affirmatively that the affiant is
competent to testify to the matters stated therein." Declarations based on review
of business records satisfy this personal knowledge requirement if the business
records are admissible under RCW 5.45.020.9 RCW 5.45.020 provides that a
business record is admissible when
the custodian or other qualified witness testifies to its identity and
the mode of its preparation, and if it was made in the regular course
of business, at or near the time of the act, condition or event, and if,
in the opinion of the court, the sources of information, method and
time of preparation were such as to justify its admission.
8 Folsom v. Burger King. 135 Wn.2d 658, 663, 958 P.2d 301 (1998).
9 Discover Bank v. Bridges, 154 Wn. App. 722, 726, 226 P.3d 191 (2010).
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No. 74050-4-1 / 6
Courts interpret "custodian" and "other qualified witness" broadly.10 The record
need not be identified by the one who created it.11 It must only be made "in the
regular course of business, under circumstances which the court finds rendered it
trustworthy."12
The declarations of Lee and Kaufman satisfy the personal knowledge
requirement because they meet the requirements of CR 56(e) and
RCW 5.45.020. We dealt with a similar challenge in Barklev v. GreenPoint
Mortgage Funding, Inc.13 Like the affiants in Barklev, Lee and Kaufman satisfied
CR 56(e) and RCW 5.45.020 when they declared under penalty of perjury that
(1)they were officers of EverBank and Regional Trustee, respectively, (2) they
had personal knowledge of their companies' practices of maintaining business
records, (3) their personal knowledge was based on examination of the records,
and (4) the attached records were true and correct copies of records made in the
regular course of business at or near the time of the transaction.14
Conner contends that the trial court improperly accepted these conclusory
declarations of personal knowledge about the records' creation and contents. In
10 State v. Ben-Neth, 34 Wn. App. 600, 603, 663 P.2d 156 (1983).
11 Cantrill v. Am. Mail Line. Ltd., 42 Wn.2d 590, 608, 257 P.2d 179 (1953).
12 State v. Rutherford. 66 Wn.2d 851, 853, 405 P.2d 719 (1965).
13 190 Wn. App. 58, 66-68, 358 P.3d 1204 (2015), review denied, 184
Wn.2d 1036(2016).
14 See Barklev, 190 Wn. App. at 67; see also Discover Bank, 154 Wn.
App. at 726.
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No. 74050-4-1 / 7
Barklev, we concluded that the trial court could properly consider "conclusory"
declarations because the moving party had failed to identify any genuine issue of
material fact about the affiants' qualifications.15 Here, the trial court admitted that
the declarations "tended to assert, without much more, that the affiant had
personal knowledge, was familiar with the records, and that the records were
prepared in the ordinary course of business." The trial court still considered the
declarations, observing, like the court in Barklev. that Conner offered nothing to
contradict the declarations. Given no reason to doubt their accuracy, the trial
court, in its discretion, could properly find the declarations reliable enough to be
considered.
Conner objects to Kaufman's reliance on the referral to foreclosure, sent
by Lender Processing Services on behalf of EverBank. She contends that
Kaufman improperly considered a document that contains hearsay and is from a
third party. However, Kaufman used the document to show that Regional
Trustee believed that it had received a referral to foreclosure from EverBank,
which is precisely what the document conveys. Kaufman's reliance on the
referral to foreclosure was proper.
Conner also claims that Kaufman's declaration is defective because it
referred to an affidavit of possession that was not attached to it. "Sworn or
15 Barklev, 190 Wn. App. at 67-68.
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No. 74050-4-1 / 8
certified copies of all papers or parts thereof referred to in an affidavit shall be
attached thereto or served therewith."16 "However, evidence may be presented
in affidavits by reference to other sworn statements in the record such as
depositions and other affidavits."17 Although the affidavit of possession was not
attached to the Kaufman declaration, the respondents submitted two identical
separate copies with the summary judgment motion. Conner contends that the
trial court could not know whether Kaufman relied on that same document, but
Conner bases this argument on pure speculation. Conner provides no reason to
believe that Kaufman relied on a different document than the one provided to the
court. Further, Conner did not ask the trial court to strike Kaufman's declaration
for this reason and first raises it in this appeal. Had Conner objected to this
alleged deficiency before resolution of the summary judgment motion,
respondents could have easily cured it.18 Conner's failure to object earlier
waives her right to make this complaint on appeal.19 The trial court properly
considered the declarations of Lee and Kaufman.
16 CR 56(e).
17 Mostrom v. Pettibon. 25 Wn. App. 158, 162, 607 P.2d 864 (1980).
18 See Meadows v. Grant's Auto Brokers. Inc.. 71 Wn.2d 874, 881, 431
P.2d 216 (1967).
19 See Meadows. 71 Wn.2d at 881.
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No. 74050-4-1 / 9
DTA Claims
The trial court declined to consider Conner's DTA claims against the
respondents, deciding that she had not pleaded them in her complaint.20 The
trial court was wrong. The allegations involving the DTA appear in Conner's first
cause of action for "wrongful foreclosure." She based her wrongful foreclosure
cause of action on claims of violations of chapter 61.24 RCW, Washington's
deeds of trust act. The language of the complaint shows that alleged DTA
violations provided the sole basis for Conner's wrongful foreclosure claim. For
example, "Plaintiff alleges that Defendants are misrepresenting their right to
enforce a debt and foreclose in violation of the statutory requirements of
Washington RCW 61.24 et seq." Conner also describes particular ways that
DTA violations led to wrongful foreclosure. Because violations of the DTA were
essential to Conner's wrongful foreclosure cause of action, the trial court erred in
dismissing those claims on this basis. But we affirm dismissal of these claims
because they were either waived or lack merit.
Conner waived her DTA claims against the respondents. A borrower's
failure to enjoin a foreclosure before the trustee's sale may result in waiver of her
claims under the statute.21 This waiver may occur if the party "(1) received notice
20 "While the plaintiff appears to have argued various alleged violations of
the Deed of Trust Act, she never actually pleaded the violations as a cause of
action."
21 RCW 61.24.040(1 )(f)(IX).
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No. 74050-4-1/10
of the right to enjoin the sale, (2) had actual or constructive knowledge of a
defense to foreclosure prior to the sale, and (3) failed to bring an action to obtain
a court order enjoining the sale."22 This court applies waiver "where it is
equitable under the circumstances and where it serves the goals of the act."23
Thus, to decide if waiver is proper, courts examine whether interested parties
had an adequate opportunity to prevent wrongful foreclosure.24 Also, failure to
bring an action to enjoin foreclosure does not waive claims asserting "(a)
[cjommon law fraud or misrepresentation; (b) [a] violation of Title 19 RCW; (c)
[fjailure of the trustee to materially comply with the provisions of this chapter; or
(d) [a] violation of RCW 61.24.026."25
Here, Conner makes no claim that she did not receive notice of her right to
enjoin the sale or that she did not know of the foreclosure sale. Nor does she
claim that she attempted to enjoin the sale. Conner had ample opportunity to
challenge the sale. All allegedly wrongful actions occurred on or before October
20, 2009. She knew or should have known about them, and the sale did not take
place until April 2010. Thus, waiver is equitable here. We therefore find that
22 Plein v. Lackey, 149 Wn.2d 214, 227, 67 P.3d 1061 (2003).
23 Albice v. Premier Mortg. Servs. of Wash.. Inc.. 174 Wn.2d 560, 570, 276
P.3d 1277(2012).
24 Albice, 174Wn.2dat571.
25 RCW 61.24.127(1).
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No. 74050-4-1 /11
under RCW 61.24.127(1), Conner waived all but her CPA claims and her good
faith claim against the trustee.26
Good Faith Claim
The trial court correctly dismissed Conner's good faith claim. Conner
claims that Regional Trustee violated its duty of good faith by failing to properly
investigate information it relied upon to initiate foreclosure. A trustee owes a duty
to act in good faith with impartiality to both lenders and borrowers.27 But the trial
court properly dismissed this claim because the trustee, Regional Trustee, was
not a party to the summary judgment motion asking for dismissal of this claim
and none of the respondents owed Conner a duty of good faith.
Conner claims that EverBank is vicariously liable for Regional Trustee's
actions under the doctrine of respondeat superior. The respondeat superior
doctrine makes a principal liable for its agent's wrongful acts committed within
the scope of the agency.28 Generally, "'a trustee is not merely an agent for the
lender or the lender's successors. Trustees have obligations to all of the parties
26 Conner argues that EverBank fraudulently advised her that making two
months of payments would avoid foreclosure and Regional Trustee falsely
indicated the number of Conner's delinquent payments. Although common law
fraud is one of the exceptions to waiver under RCW 61.24.127(1), Conner offers
no authority to support her fraud claims. Further, she did not raise this issue until
appeal. We therefore decline to address her arguments about the fraud claim.
27 RCW 61.24.010(4); Lyons v. U.S. Bank Nat'l Ass'n, 181 Wn.2d 775,
787, 336P.3d 1142(2014).
28 Black's Law Dictionary 1505 (10th ed. 2014).
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No. 74050-4-1/12
to the deed, including the homeowner.'"29 However, "[wjhere the beneficiary so
controls the trustee so as to make the trustee a mere agent of the beneficiary,
then as principal], the beneficiary may be liable for the actions of its agent."30
Here, Conner asserts that Regional Trustee was a mere agent of EverBank
because EverBank controlled the transaction by its authority to start and stop the
foreclosure. Assuming this is true, Conner still did not present any evidence
showing that EverBank exercised an improper degree of control over Regional
Trustee. Because Conner does not show that EverBank improperly controlled
Regional Trustee, her proposition that Regional Trustee acted as EverBank's
agent fails.
Similarly, Conner's argument that Regional Trustee and EverBank should
be held jointly and severally liable under theories of civil conspiracy and joint
venture liability also fails. Conner cites no authority applying these theories in
deed of trust cases. Further, Conner offers no evidence to justify their
application in this case. To prove civil conspiracy, a plaintiff must show that each
participant combined to accomplish an unlawful purpose or a lawful purpose by
unlawful means.31 To establish joint venture liability, a plaintiff must show a
29 Klem v. Wash. Mut. Bank. 176 Wn.2d 771, 789, 295 P.3d 1179 (2013)
(quoting Bain v. Metro. Mortg. Grp.. Inc.. 175 Wn.2d 83, 93, 285 P.3d 34 (2012)).
30 Klem, 176 Wn.2d at 791 n.12.
31 Newton Ins. Agency & Brokerage, Inc. v. Caledonian Ins. Grp., Inc., 114
Wn. App. 151, 160, 52 P.3d 30 (2002).
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No. 74050-4-1/13
contract, a common purpose, a community of interest, and equal right to a voice
and control.32 Conner offers no evidence that EverBank had a common objective
with Regional Trustee, lawful or otherwise. Because the respondents have no
liability for Regional Trustee's actions, we decline to consider Conner's claims
based on Regional Trustee's violation of its duty as trustee. Because the
respondents have no primary or vicarious liability, we affirm dismissal of
Conner's good faith claim.
CPA Claims
Next, we address Conner's CPA claims. The CPA prohibits "[ujnfair
methods of competition and unfair or deceptive acts or practices in the conduct of
any trade or commerce."33 To prevail on a CPA claim, the plaintiff must show (1)
an unfair or deceptive act or practice, (2) occurring in trade or commerce, (3) a
public interest impact, (4) injury to the plaintiff in his or her business or property,
and (5) a causal link between the unfair or deceptive act and the injury.34
Conner claims deceptive practices by Regional Trustee, EverBank, and
MERS caused her injury. Specifically, Conner bases her CPA claim on MERS's
improper assignment of the DOT and on violations of the DTA, including
32 Kniselv v. Burke Concrete Accessories, Inc., 2 Wn. App. 533, 537, 468
P.2d 717 (1970) (quoting Carboneau v. Peterson, 1 Wn.2d 347, 374, 95 P.2d
1043(1939)).
33 RCW 19.86.020.
34 Klem. 176 Wn.2d at 782 (quoting Hangman Ridge Training Stables, Inc.
v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986)).
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No. 74050-4-1 /14
EverBank's allegedly improper appointment of Regional Trustee, and various
violations of the DTA by Regional Trustee. Because Regional Trustee was not
involved in the summary judgment motion and is not a party to this appeal, we do
not consider CPA claims based on Regional Trustee's alleged DTA violations.
As an initial matter, the respondents incorrectly assert that the statute of
limitations bars Conner's MERS-based CPA claim. A litigant must commence a
CPA action within four years from the date that cause of action accrues.35 A
CPA claim begins to accrue when, with the exercise of due diligence, the
claimant should have discovered the basis for the cause of action.36 The events
on which Conner bases her CPA claim occurred in late 2009 in connection with
foreclosure on her property. Conner sued in February 2012, well within the four-
year period for bringing a CPA claim.
Because the causation element of the CPA claim is dispositive, we focus
exclusively on it. Conner identified her injuries as the loss of her home and the
expenses she incurred seeking legal help to determine ownership of her note.37
35 RCW 19.86.120.
36 See Shepard v. Holmes, 185 Wn. App. 730, 739, 345 P.3d 786 (2014);
Maver v. Sto Indus., Inc., 123 Wn. App. 443, 462-63, 98 P.3d 116 (2004), rev'd in
part on other grounds. 156 Wn.2d 677, 132 P.3d 115 (2006).
3? See Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27, 62, 204 P.3d
885 (2009) ("Consulting an attorney to dispel uncertainty regarding the nature of
an alleged debt is distinct from consulting an attorney to institute a CPA claim.
Although the latter is insufficient to show injury to business or property, the
former is not." (citation omitted)).
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No. 74050-4-1/15
But Conner fails to show that either MERS's DOT assignment or EverBank's
appointment of successor trustee caused these injuries. First, Connor does not
show that EverBank relied on MERS's assignment of the DOT for its authority to
foreclose or appoint a successor trustee. Also, she does not dispute that she
failed to meet her debt obligations and cure her default despite receiving notice
of foreclosure. The record contains no evidence that the alleged deceptive acts
of the respondents caused Conner's default or failure to cure. Thus, Conner
cannot show that but for alleged deceptive acts, EverBank would not have
foreclosed on her home.
Nor does Conner show how the alleged deceptive acts caused Conner to
incur legal expenses. Neither the MERS assignment nor the appointment of
successor trustee had any effect on who was the owner or holder of the note.
Thus, these acts did not cause Conner to investigate ownership. Conner failed
to demonstrate a genuine issue of material fact that the MERS assignment of the
DOT, EverBank's appointment of trustee, or any other allegedly improper action
by the respondents caused her injury. Because Conner does not raise facts to
show a causal link between the alleged deceptive acts and her injury, we do not
address whether she has established the other elements of her CPA claim.
Conner has failed to produce any evidence supporting an essential
element of her CPA claim. We affirm dismissal of this claim.
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CR 56(f) Continuance
The trial court properly denied Conner's request for a continuance under
CR 56(f). Before oral argument on the respondents' summary judgment motion,
Conner requested a continuance to conduct discovery on certain questions.
Finding those questions were immaterial to the issues before it, the trial court
denied the request. A trial court may deny a CR 56(f) continuance for a number
of reasons: "(1) the requesting party does not offer a good reason for the delay
in obtaining the desired evidence; (2) the requesting party does not state what
evidence would be established through the additional discovery; or (3) the
desired evidence will not raise a genuine issue of material fact."38 An appellate
court will affirm a trial court's decision to deny a CR 56(f) motion absent a
showing of manifest abuse of discretion.39
Here, the evidence Conner sought would not have created an issue of
fact. Conner asserts material issues of fact exist about EverBank's status as
"actual holder" of the note with authority to foreclose. Conner moved for a CR
56(f) continuance for the purpose of conducting discovery on this question.
Specifically, Conner planned to request information on the date parties acquired
ownership of the note and DOT; the amount, form, and source of consideration
38 Baechler v. Beaunaux. 167 Wn. App. 128, 132, 272 P.3d 277 (2012)
(quoting Turner v. Kohler, 54 Wn. App. 688, 693, 775 P.2d 474 (1989)).
39 Lake Chelan Shores Homeowners Ass'n v. St. Paul Fire & Marine Ins.
Co., 176 Wn. App. 168, 183, 313 P.3d 408 (2013).
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No. 74050-4-1/17
paid for the note and DOT; the date consideration was paid; and the identity of
the agents involved. The trial court denied the CR 56(f) motion, concluding that
none of Conner's requested discovery was material to the summary judgment
issues.
Conner claims that whether EverBank or Fannie Mae was the owner and
holder of the note is disputed. But any evidence Conner hoped to obtain about
ownership or possession would not have changed the outcome here. First,
ownership is not relevant to ability to enforce and is, thus, not material.40
Second, possession is the only salient fact for determining the "actual holder."41
Undisputed evidence shows that EverBank was the holder of the note. Conner
does not provide any reason to believe that more discovery would uncover
evidence showing otherwise. And if such evidence existed, Conner does not
explain why she did not have sufficient time to discover it earlier in the litigation.
Conner asserts that she needed additional time to conduct discovery
because the respondents did not answer her amended complaint until a month
before the hearing on summary judgment. But Conner had three years for
discovery. The respondents' delay in filing their answer does not excuse
Conner's failure to conduct discovery on this issue.
40 See Truiillo v. Nw. Tr. Servs., Inc.. 181 Wn. App. 484, 500, 326 P.3d
768 (2014). rev'd on other grounds. 183 Wn.2d 820, 355 P.3d 1100(2015).
41 Truiillo. 181 Wn. App. at 498.
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Conner did not identify any evidence that she might obtain through
discovery that would raise a material issue of fact. The trial court did not abuse
its discretion by denying Conner's CR 56(f) motion.
Attorney Fees
Conner requests attorney fees under both RAP 18.1 and the terms of the
DOT. Because she does not prevail on any issue, we deny her request.
CONCLUSION
Because the undisputed facts show that Conner waived her DTA claims,
except the good faith claim against the trustee, the trial court properly dismissed
those claims. Because the respondents did not owe Conner a duty of good faith,
the trial court properly dismissed Conner's good faith claim against them. And
because Conner does not provide facts to support the causation element of her
CPA claim, the trial court properly dismissed that claim as well. We affirm.
WE CONCUR:
^'^ l^cfe^ I .
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