Karen S. Pooley, App. v. Quality Loan Service Corp. Of Wa, Et Ano., Resps.

• Court: Court of Appeals of Washington
• Decided: August 14, 2017
• Docket: 73705-8
• Status: Unpublished

Opinion

- COUT; OF rT = STATE OF WAS iO1

2011 /AUG 1 Wr110: 13 IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

KAREN S. POOLEY, ) ) DIVISION ONE Appellant, ) ) No. 73705-8-1 v. ) ) UNPUBLISHED OPINION QUALITY LOAN SERVICE ) CORPORATION OF WASHINGTON,a ) Washington corporation, QUALITY ) LOAN SERVICE CORP., a California ) corporation, ASHLEY V. HENNESSEE, ) as representative of QUALITY LOAN ) SERVICE CORP., QUALITY LOAN ) SERVICE CORP. OF WASHINGTON, ) and as herself individually, ) ) Respondent. ) FILED: August 14, 2017 ) DWYER, J. — Karen Pooley appeals from orders of the superior court. We

affirm.

This opinion has not been selected for publication. The facts of this case

are known to the parties and need not be set forth herein.

We review de novo a trial court's order granting summary judgment,

performing the same inquiry as the trial court. MacMeekin v. Low Income Hous.

Inst., Inc., 111 Wn. App. 188, 195,45 P.3d 570 (2002). An order granting

summary judgment may be entered when there is no genuine issue of material

fact and the moving party is entitled to judgment as a matter of law. CR 56(c). In No. 73705-8-1/2

reviewing a summary judgment order, we view the facts and all reasonable

inferences therefrom in the light most favorable to the nonmoving party.

Holmquist v. King County, 182 Wn. App. 200, 207, 328 P.3d 1000(2014).

The party moving for summary judgment bears the initial burden of

demonstrating the absence of a genuine issue of material fact and entitlement to

judgment as a matter of law. Young v. Key Pharms, Inc., 112 Wn.2d 216, 225,

770 P.2d 182(1989). If the defendant is the moving party, that burden may be

met by demonstrating that there is an absence of evidence to support the

nonmoving party's case. Howell v. Spokane & Inland Empire Blood Bank, 117

Wn.2d 619,624,818 P.2d 1056(1991)(citing Young, 112 Wn.2d at 225). Once

that burden is met, the burden shifts to the plaintiff to set forth specific facts

showing that there is a genuine issue for trial. Grimwood v. Univ. of Puget

Sound, Inc., 110 Wn.2d 355, 359, 753 P.2d 517(1988). The party opposing a

motion for summary judgment"may not rely on speculation, argumentative

assertions that unresolved factual issues remain, or in having its affidavits

considered at face value." Seven Gables Corp. v. MGM/UA Entm't Co., 106

Wn.2d 1, 13, 721 P.2d 1(1986).

Ill

Pooley first contends that the promissory note that she signed is

unenforceable because the identity of the note holder is unknown. She is wrong.

A "person entitled to enforce" a negotiable instrument is "the holder of the

instrument." RCW 62A.3-301. The "holder" of a note is "[t]he person in

possession of a negotiable instrument that is payable either to bearer or to an

2 No. 73705-8-1/3

identified person that is the person in possession." RCW 62A.1-201(b)(21)(A).

In instances where the original note has been lost, RCW 62A.3-309 governs

enforcement of the note. A "Lost Note Affidavit, with the endorsement in blank

appearing on its face,[is] sufficient to replace the original Note." In re Allen, 472

B.R. 559, 567(B.A.P. 9th Cir. 2012).

Here, JPMorgan Chase Bank, National Association (Chase) physically

holds the note. Although the original note was lost, Chase executed a lost note

affidavit and attached a copy of the original note. This is sufficient to replace the

original note. Allen, 472 B.R. at 567. Thus, Chase is the note holder entitled to

enforce the note. See 5A RONALD A. ANDERSON, UNIFORM COMMERCIAL CODE § 3-

301:9, at 572(rev. ed. 1994)("The Code declares the right of the holder to

enforce the paper. The payee in possession of paper is the holder and may sue

on the paper, as against the contention that the payee is not the real party in

interest, did not give value, or was not a holder in due course."(footnote

omitted)). Pooley's contention fails.'

IV

Pooley next contends that Quality Loan Service Corporation of

Washington and Quality Loan Service Corporation (collectively Quality) breached

1 Pooley contends that the lost note affidavit is insufficient to replace the original note. This is so, she asserts, because the note provides an alternative remedy: If any of the Loan Documents are lost, stolen, mutilated or destroyed and the Note Holder delivers to me an indemnification in my favor, signed by the Note Holder, then I will sign and deliver to the Note Holder a Loan Document identical in form and content which will have the effect of the original for all purposes. Pooley's contention fails. Although the note itself provides one remedy for a lost note, this provision does not act to exclude all other remedies available by law. The lost note affidavit is one such remedy. - 3- No. 73705-8-1/4

its duty of good faith pursuant to the deeds of trust act(DTA), chapter 61.24

RCW,a violation of the Consumer Protection Act(CPA), chapter 19.86 RCW.

Trustees have an obligation to remain impartial and protect the interests of

all of the parties, including the borrower. Lyons v. U.S. Bank Nat'l Ass'n, 181

Wn.2d 775, 787, 336 P.3d 1142(2014). "A foreclosure trustee must'adequately

inform' itself regarding the purported beneficiary's right to foreclose, including, at

a minimum, a 'cursory investigation' to adhere to its duty of good faith." Lyons,

181 Wn.2d at 787 (internal quotation marks omitted)(quoting Walker v. Quality

Loan Serv. Corp., 176 Wn. App. 294, 309-10, 308 P.3d 716 (2013)). A trustee's

failure to act impartially between note holders and mortgagees can support a

CPA claim. Lyons, 181 Wn.2d at 787.

"To prevail on a CPA claim, a plaintiff must show that the defendant

engaged in an unfair or deceptive act or practice that occurred in trade or

commerce, that affected the public interest, and that injured the plaintiffs

business or property, and that there is a causal link between the unfair or

deceptive act and the injury suffered." Deegan v. Windermere Real

Estate/Center-Isle, Inc., 197 Wn. App. 875, 885, 391 P.3d 582(2017)(citing

Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash.. Inc., 162 Wn.2d 59, 74,

170 P.3d 10(2007)). "Failure to satisfy even one of the elements is fatal to a

CPA claim." Sorrel v. Eagle Healthcare, Inc., 110 Wn. App. 290, 298, 38 P.3d

1024(2002).

Violations of the DTA may be actionable under the CPA regardless of

whether a foreclosure sale has been completed. The analysis of the elements of

4 No. 73705-8-1/5

a CPA action premised on an alleged DTA violation is the same analysis as any

other CPA claim premised on unfair or deceptive practices. Frias v. Asset

Foreclosure Servs., Inc., 181 Wn.2d 412, 432, 334 P.3d 529 (2014).2

A

Pooley contends that Quality violated its duty of good faith by relying on

what she asserts to be a facially ambiguous beneficiary declaration. We

disagree.

Pursuant to RCW 61.24.030(7)(a), a trustee must have proof that the

beneficiary is the owner of any promissory note before recording the notice of

trustee's sale. A foreclosure trustee's reliance on an ambiguous beneficiary

declaration constitutes a violation of the trustee's duty of good faith under the

DTA. Lyons, 181 Wn.2d at 790-91.

Here, the beneficiary declaration provided to Quality is not ambiguous.

Rather, the declaration clearly identifies the beneficiary and owner of the note.

Moreover, the beneficiary declaration was not the only document available to

Quality establishing the beneficiary's ownership of the note. No violation of the

duty of good faith is established.

Pooley next contends that Quality failed to adhere to the preforclosure

requirements of the Foreclosure Fairness Act(FFA) before issuing its third notice

of trustee's sale. Pooley asserts that such failure is a per se violation of the CPA.

2 Washington courts do not recognize a cause of action for a presale, independent violation of the DTA. Frias, 181 Wn.2d at 417. Pooley asserts various technical violations of the DTA without analyzing those alleged violations in the context of a CPA claim. Those claims thus fail. -5- No. 73705-8-1/6

Pursuant to RCW 61.24.135, it is a per se violation of the CPA to fail to

initiate contact with a borrower and exercise due diligence as required by the

FFA. The FFA, RCW 61.24.031, details the due diligence requirements to be

performed by the beneficiary or authorized agent.

The plain language of the FFA makes clear that only the beneficiary or its

authorized agent is responsible for exercising due diligence in initiating contact

with the borrower and providing the borrower with a letter conforming to the

statutory requirements. RCW 61.24.031(1)(b)("A beneficiaty or authorized agent

shall make initial contact... ."(emphasis added)); RCW 61.24.031(5)("A notice

of default may be issued under RCW 61.24.030(8) if a beneficiaty or authorized

agent has initiated contact... ."(emphasis added)). Quality is neither the

beneficiary nor its authorized agent. Thus, no per se violation of the CPA is

established.3

Pooley also asserts various other violations of the DTA but fails to

establish all necessary elements of a CPA claim.

Pooley accuses Quality of failing to provide the telephone number of the

beneficiary and of misrepresenting the identity of the beneficiary in the 2010

notice of default. Pooley also complains that Quality did not obtain a copy of the

note until 2013 and asserts that Quality relied on two differing and conflicting

3 Pooley failed to otherwise demonstrate that Quality's issuance of the third notice of trustee's sale satisfies all necessary elements of a CPA claim. Notably, Pooley expressly declined to address how she was injured by Quality's conduct—asserting instead that "actual damages were exhaustively outlined and were generally undisputed on summary judgment." Br. of Appellant at 44. Contrary to her assertion, damages were heavily disputed on summary judgment and entirely unrelated to the third notice of trustee's sale.

-6 - No. 73705-8-1/7

appointment of successor trustee documents. Although Pooley contends that

this conduct constitutes unfair or deceptive acts, she fails to address any of the

other necessary elements of a CPA claim. Moreover, her assertions are largely

unsupported by the record. She establishes no entitlement to appellate relief on

these claims.

The remainder of Pooley's claims relate to her assertion that Quality

violated its duty of good faith by failing to halt foreclosure and investigate the

identity of the beneficiary. But Quality adequately informed itself as to the

beneficiary's right to foreclose and Chase's authority to enforce the note. Quality

communicated the findings of its various investigations to Pooley. Because

Quality owes a duty of good faith to all parties—including the beneficiary—

Pooley's assertion that Quality should have immediately halted foreclosure per

her demands fails.4 Lyons, 181 Wn.2d at 787.

V

Finally, Pooley contends that the trial court erred by awarding defendants

McCarthy & Holthus, LLP(M&H)fees and costs pursuant to RCW 4.84.185 and

CR 11.

"The decision to make an award of attorney's fees under RCW 4.84.185 is

left to the discretion of the trial court and will not be disturbed in the absence of a

4 For the first time in her reply brief—and in a confusing manner—Pooley asserts that Quality fraudulently concealed the identity of the beneficiary from her and from the trial court. Pooley cites to RCW 74.09.210(1)(b), a statute addressing fraudulent practices used to obtain medical care benefits or payments. "An issue raised and argued for the first time in a reply brief is too late to warrant consideration." Cowiche Canyon Conservancy v. Bosley, 118 Wn.2d 801, 809, 828 P.2d 549 (1992). To the extent that her contention raises an issue not addressed in her opening brief, we decline to address it - 7- No. 73705-8-1/8

clear showing of abuse." Rhinehart v. Seattle Times, Inc., 59 Wn. App. 332, 339-

40, 798 P.2d 1155(1990)(citing Clarke v. Equinox Holdings, Ltd., 56 Wn. App.

125, 131-33, 783 P.2d 82(1989)). "A trial court cannot be said to abuse its

discretion in awarding attorney's fees under RCW 4.84.185 if the facts alleged do

not state a cause of action that can be supported by any rational argument on the

law or facts." Rhinehart, 59 Wn. App. at 340 (citing Camer v. Seattle Sch. Dist.

No. 1, 52 Wn. App. 531, 539, 762 P.2d 356 (1988)).

"The determination of whether a violation of CR 11 has occurred is [also]

within the sound discretion of the trial court." Rhinehart, 59 Wn. App. at 341

(citing Doe v. Spokane & Inland Empire Blood Bank, 55 Wn. App. 106, 110, 780

P.2d 853(1989)). Sanctions are mandatory if the court determines that a

violation has occurred. Rhinehart, 59 Wn. App. at 341 (citing Miller v. Badgley,

51 Wn. App. 285, 301, 753 P.2d 530 (1988)). A trial court has broad discretion

regarding the nature and scope of the sanctions that it imposes. Rhinehart, 59

Wn. App. at 341 (citing Badgley, 51 Wn. App. at 303).

Pooley asserted claims of civil conspiracy and joint venture liability against

M&H. The trial court dismissed the claims against M&H on summary judgment

and awarded M&H attorney fees and costs.

Pooley failed to set forth evidence establishing either civil conspiracy or

joint venture liability in support of her amended complaint. In her reply to M&H's

motion to dismiss, Pooley relied on inadmissible hearsay, argumentative

assertions, legal conclusions, and statements made without substantiation. All of

8 No. 73705-8-1/9

the pleadings related to M&H were frivolous and advanced without reasonable

cause. The trial court did not abuse its discretion by so ruling.5

Affirmed.

We concur:

5 M&H requests an award of costs and fees on appeal pursuant to RAP 18.1(a). Because we agree that Pooley's claims against M&H were frivolous, we grant M&H an award of fees and costs for defending this appeal. Upon proper compliance with our rules, a commissioner of our court will enter an appropriate award by order.

- 9-