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Respondents, UNPUBLISHED OPINION V.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