Christopher E. Larson, Et Ano., V. Snohomish County

• Court: Court of Appeals of Washington
• Decided: December 6, 2021
• Docket: 80968-7
• Status: Published

Opinion

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,

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.” -2- No. 80968-7-I and No. 81874-1/3

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.

-3- No. 80968-7-I and No. 81874-1/4

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. -4- No. 80968-7-I and No. 81874-1/5

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 -5- No. 80968-7-I and No. 81874-1/6

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.” -6- No. 80968-7-I and No. 81874-1/7

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. -7- No. 80968-7-I and No. 81874-1/8

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.

-8- No. 80968-7-I and No. 81874-1/9

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 -9- No. 80968-7-I and No. 81874-1/10

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. - 10 - No. 80968-7-I and No. 81874-1/11

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 - 11 - No. 80968-7-I and No. 81874-1/12

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). - 12 - No. 80968-7-I and No. 81874-1/13

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 - 13 - No. 80968-7-I and No. 81874-1/14

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. - 14 - No. 80968-7-I and No. 81874-1/15

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.

- 15 - No. 80968-7-I and No. 81874-1/16

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 - 16 - No. 80968-7-I and No. 81874-1/17

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 - 17 - No. 80968-7-I and No. 81874-1/18

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 &

- 18 - No. 80968-7-I and No. 81874-1/19

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.

- 19 - No. 80968-7-I and No. 81874-1/20

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 - 20 - No. 80968-7-I and No. 81874-1/21

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. - 21 - No. 80968-7-I and No. 81874-1/22

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).

- 22 - No. 80968-7-I and No. 81874-1/23

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 - 23 - No. 80968-7-I and No. 81874-1/24

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. - 24 - No. 80968-7-I and No. 81874-1/25

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. - 25 - 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. - 26 - 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). - 27 - 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

- 28 - 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.” - 29 - No. 80968-7-I and No. 81874-1/30

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. - 30 - No. 80968-7-I and No. 81874-1/31

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). - 31 - 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. - 32 - 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

- 33 - 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. - 34 - No. 80968-7-I and No. 81874-1/35

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 - 35 - No. 80968-7-I and No. 81874-1/36

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.” - 36 - No. 80968-7-I and No. 81874-1/37

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. - 37 - No. 80968-7-I and No. 81874-1/38

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.

- 38 - 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 - 39 - 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’ - 40 - 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’

- 41 - No. 80968-7-I and No. 81874-1/42

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 - 42 - No. 80968-7-I and No. 81874-1/43

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. - 43 - 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 - 44 - No. 80968-7-I and No. 81874-1/45

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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