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4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 LAKEVIEW LOAN SERVICING, LLC, Case No. 3:25-cv-05344-TMC 8 Plaintiff, ORDER ON PLAINTIFF’S MOTION FOR 9 DEFAULT JUDGMENT, DEFENDANTS’ v. MOTION TO DENY AND VACATE THIS 10 CASE, AND PLAINTIFF’S MOTION TO MATTHEW J. SNYDER, et al., STRIKE 11 Defendants. 12 13
14 I. INTRODUCTION 15 Before the Court are Plaintiff Lakeview Loan Servicing, LLC’s (“Lakeview”) motion for 16 entry of final default judgment (Dkt. 14), Defendants Matthew Snyder and Julie Snyder’s motion 17 to deny and vacate this case (Dkt. 17), and Lakeview’s motion to strike Defendants’ motion 18 (Dkt. 19). For the following reasons, the Court GRANTS IN PART and DENIES IN PART the 19 motion for default judgment, DENIES Defendants’ motion, and DENIES the motion to strike as 20 moot. 21 II. BACKGROUND 22 A. Facts 23 On September 21, 2022, Defendants received title to a property located at 1525 W. 7th 24 Street, Port Angeles, Washington 98363 (the “Property”) via a statutory warranty deed, which 1 was recorded on October 3, 2022. Dkt. 1 at 14; see id. at 2 ¶ 4. Eight days after receiving title, 2 Defendants entered into a loan repayment agreement with Homebridge Financial Services, Inc. 3 (“Homebridge”), in which Defendants promised to pay Homebridge $319,200 with 6.625%
4 yearly interest. Id. at 16–18. The same day, Defendants executed a deed of trust transferring 5 rights in the property to Homebridge as collateral on the loan. Id. at 20–39. The exhibits 6 submitted by Lakeview in this case contain contradictory information as to when the deed of 7 trust was recorded: one version of the document appears to have been recorded on October 5, 8 2022, id. at 20, and another version appears to have been recorded on October 3, 2022. 9 Dkt. 15 at 10. 10 On October 10, 2024, Homebridge assigned the deed of trust to Lakeview. Dkt. 1 at 40– 11 43. On October 29, 2024, Mr. Snyder executed two documents titled “Release of Mortgage” and 12 “Demand for Cancellation of Mortgage Inscription and Release of Lien.” Id. at 45–48. These
13 documents purported to cancel Defendants’ debt to Homebridge because Homebridge “did sell 14 and/or convey all beneficial interest in a mortgage loan regarding [the Property] to the Fannie 15 May REMIC Trust 2022-74.” Id. In November 2024, Defendants conveyed the deed and title to 16 the Property to a private buyer. Id. at 58–60. 17 Lakeview alleges that as of March 2025, Defendants owed $333,822.88 on the loan, id. at 18 4 ¶ 15, and that they owed $343,336.39 on the loan as of July 2025. Dkt. 15 ¶ 7. 19 B. Procedural history 20 On April 23, 2025, Lakeview filed a complaint alleging that the release of mortgage and 21 subsequent conveyance of the Property “were executed and recorded as a result of fraud 22 committed by Defendants.” Dkt. 1 at 4 ¶ 14. Claiming that Defendants are liable for breach of
23 contract, unjust enrichment, and fraud, Lakeview seeks cancellation of the release of mortgage 24 1 and of the document conveying the Property, $332,822.88 in damages, and declaratory relief. 2 Id. at 5–11. 3 On May 7, Defendants were personally served with the complaint. Dkts. 8, 9. Defendants
4 failed to file a responsive pleading within the time limit specified under Federal Rule of Civil 5 Procedure 12. See Fed. R. Civ. P. 12(a)(1)(A)(i). On June 10, Lakeview moved for an entry of 6 default. Dkt. 10. The Clerk entered default the next day. Dkt. 12. 7 On July 11, Lakeview moved for final default judgment. Dkt. 14. Defendants did not 8 oppose the motion, but on August 21, they moved to “deny and vacate this case.” Dkt. 17. 9 On September 8, Lakeview moved to strike Defendants’ motion. Dkt. 19. That same day, 10 Lakeview filed a response to Defendants’ motion. Dkt. 20. All three motions are now ripe for the 11 Court’s consideration. 12 III. LEGAL STANDARD Motions for default judgment are governed by Federal Rule of Civil Procedure 55. The 13 Rule authorizes the Court to enter default judgment against a party that fails to appear or 14 otherwise defend in an action. Fed. R. Civ. P. 55. In deciding motions for default judgment, 15 courts take “‘the well-pleaded factual allegations’ in the complaint ‘as true,’ ‘except those 16 relating to the amount of damages.’” Rozario v. Richards, 687 F. App’x 568, 569 (9th Cir. 2017) 17 (internal citations omitted) (first quoting DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th 18 Cir. 2007); and then quoting Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977)); 19 Fed. R. Civ. P. 8(b)(6). The court does not accept the truth of statements in the complaint that 20 amount to legal conclusions. DIRECTV, Inc., 503 F.3d at 854. “[N]ecessary facts not contained 21 in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps 22 v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992). 23 24 1 The “starting point is the general rule that default judgments are ordinarily disfavored. 2 Cases should be decided upon their merits whenever reasonably possible.” Eitel v. McCool, 782 3 F.2d 1470, 1472 (9th Cir. 1986). Courts weigh the following factors in deciding motions for
4 default judgment: 5 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at 6 stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy 7 underlying the Federal Rules of Civil Procedure favoring decisions on the merits.
8 Id. at 1471–72; see NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616–17 (9th Cir. 2016) 9 (suggesting that district courts “weigh” the Eitel factors). District courts’ decisions on motions 10 for default judgment are discretionary. See NewGen, LLC, 840 F.3d at 616 (“We review . . . the 11 grant of a default judgment for abuse of discretion.”). Failure to establish the second and third 12 factors is dispositive and requires denial of the motion. See Cripps, 980 F.2d at 1268 (vacating 13 default judgment where “the default judgment [was] legally insupportable”); United States ex 14 rel. Lesnik v. Eisenmann SE, No. 16-CV-01120-LHK, 2021 WL 4243399, at *11 (N.D. Cal. 15 Sept. 17, 2021) (noting that “failure to satisfy the second and third Eitel factors is sufficient to 16 deny a motion for default judgment”). 17 IV. JURISDICTION When evaluating a motion for default judgment, the Court begins by examining its 18 jurisdiction. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). Here, the Court has subject matter 19 jurisdiction under the federal diversity statute, 28 U.S.C. § 1332(a), because Lakeview is a 20 citizen of Delaware and Florida; Defendants are citizens of Washington; and the amount in 21 controversy exceeds $75,000. See Dkt. 1 ¶¶ 2–3, 33; Dkt. 2; 28 U.S.C. § 1332(c)(1) (“[A] 22 corporation shall be deemed to be a citizen of every State and foreign state by which it has been 23 incorporated and of the State or foreign state where it has its principal place of business.”). The 24 1 Court has personal jurisdiction over Defendants because they are residents of Washington. 2 See Dkt. 8 (service upon Mr. Snyder at Washington residence); Dkt. 9 (service upon Ms. Snyder 3 at Washington residence).
4 V. DISCUSSION 5 A. The Court grants in part Lakeview’s motion for default judgment. In evaluating Lakeview’s motion for default judgment, the Court weighs the seven 6 factors articulated in Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). Because six of 7 the seven factors favor default judgment, the Court GRANTS Lakeview’s motion for default 8 judgment as to Lakeview’s claims that Defendants breached the loan repayment agreement and 9 that the deed of trust is a security interest in the Property. However, the Court DENIES the 10 motion as to Lakeview’s unjust enrichment and fraud claims and DISMISSES the unjust 11 enrichment claim with prejudice. 12 1. Possibility of prejudice to Lakeview 13 Lakeview argues that it is prejudiced because it has not been able to collect payments on 14 the loan. Dkt. 14 at 4. It contends that “[w]ithout a default judgment, Plaintiff’s valid and 15 unsatisfied lien would remain in limbo (at best) and fraudulently terminated (at worst).” Id. at 3. 16 This factor favors default judgment: Defendants have recorded documents purporting to 17 release themselves from their mortgage obligations and convey ownership of the Property, and 18 Lakeview has not received full payment on the loan. Dkt. 1 at 4 ¶ 15, 45–48, 58–60. Absent a 19 default judgment, Lakeview “will ‘be denied the right to judicial resolution’ of its claims and 20 will be ‘without other recourse for recovery.’” GS Holistic, LLC v. City Smoke Corp., No. C24- 21 1286JLR, 2025 WL 1345083, at *2 (W.D. Wash. May 8, 2025) (quoting Elektra Ent. Grp. Inc. v. 22 Crawford, 226 F.R.D. 388, 392 (C.D. Cal. 2005)). 23 24 1 2. Substantive merits and sufficiency of complaint 2 Lakeview argues that it has provided “sufficient information” in the complaint and 3 motion to meet its obligation under the second and third factors: the merits of Lakeview’s
4 substantive claims and the sufficiency of the complaint. Dkt. 14 at 4. These two factors, which 5 are “frequently analyzed together,” favor the entry of default judgment “if the allegations in a 6 complaint sufficiently state a claim upon which relief can be granted.” Strategic Funding Source, 7 Inc. v. Boonkur, No. 3:25-CV-05220-TL, 2025 WL 3073089, at *4 (W.D. Wash. Nov. 4, 2025). 8 This means that the “complaint must contain sufficient factual matter, accepted as true, to ‘state a 9 claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting 10 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court may not enter default judgment if 11 the complaint fails to state a claim. See Moore v. United Kingdom, 384 F.3d 1079, 1090 (9th Cir. 12 2004).
13 The Court examines each of Lakeview’s substantive claims below. As explained below, 14 Lakeview has sufficiently alleged (1) that Defendants breached the loan agreement and deed of 15 trust, and (2) that Lakeview holds a security interest in the Property. Because the complaint 16 states a claim for relief on those two counts, the second and third Eitel factors favor default 17 judgment. However, because the successful breach of contract claim precludes a claim for unjust 18 enrichment, the Court DISMISSES Lakeview’s unjust enrichment claim with prejudice. Finally, 19 Lakeview has not sufficiently alleged a claim for fraud; however, the Court will permit 20 Lakeview to file an amended complaint by January 29, 2026 if it plans to continue pursuing its 21 fraud claim. 22
23 24 1 a. Breach of contract 2 Lakeview alleges that Defendants breached the loan agreement and deed of trust by 3 failing to make payments, executing the release of mortgage, and conveying the Property to a
4 buyer. Dkt. 1 ¶¶ 28–35. 5 In Washington, “[a] breach of contract is actionable only if the contract imposes a duty, 6 the duty is breached, and the breach proximately causes damage to the claimant.” Nw. Indep. 7 Forest Mfrs. v. Dep’t of Lab. & Indus., 78 Wn. App. 707, 712, 899 P.2d 6 (1995). “To bring a 8 claim for breach of contract, a party must point to a separate duty contained in the contract that is 9 different from the duties already imposed by law on the parties.” Anderson v. Soap Lake Sch. 10 Dist., 191 Wn.2d 343, 376, 423 P.3d 197 (2018). 11 Lakeview has stated a claim for breach of contract. Lakeview alleges that Defendants 12 executed a deed of trust, creating a duty of repayment; that Defendants breached that duty by
13 executing the release of mortgage; and that Lakeview is owed $333,822.88 as a result of 14 Defendants’ breach. Dkt. 1 at 3 ¶¶ 9, 11; id. at 4 ¶ 15. Attached to the complaint are copies of the 15 loan agreement, the deed of trust, the assignment of the deed of trust, and Defendants’ release of 16 mortgage. Id. at 16–56. This is sufficient for default judgment on this claim. 17 b. Unjust enrichment Next, Lakeview alleges that Defendants have been unjustly enriched due to their failure 18 to make payments on the loan. Dkt. 1 ¶¶ 36–39. 19 “Unjust enrichment is the method of recovery for the value of the benefit retained absent 20 any contractual relationship because notions of fairness and justice require it.” Young v. Young, 21 164 Wn.2d 477, 484, 191 P.3d 1258 (2008) (emphasis added). A party may not bring a claim for 22 unjust enrichment if the relationship between the parties is governed by a valid contract. 23 24 1 See Bircumshaw v. State, 194 Wn. App. 176, 205–06, 380 P.3d 524 (2016); see also Vernon v. 2 Qwest Commc’ns Int’l, Inc., 643 F. Supp. 2d 1256, 1267 (W.D. Wash. 2009). 3 Because Lakeview has sufficiently alleged the existence of a valid contract, it cannot also
4 claim unjust enrichment. See Boonkur, No. 3:25-CV-05220-TL, 2025 WL 3073089, at *5 5 (concluding on a motion for default judgment that the plaintiff could not succeed on its unjust 6 enrichment claim because it had successfully alleged breach of contract). The Court DISMISSES 7 Lakeview’s unjust enrichment claim with prejudice. 8 c. Fraud 9 Lakeview argues that “Defendants made false, material misrepresentations by unlawfully 10 executing the Fraudulent Release of Mortgage and Fraudulent Reconveyance and thereafter 11 recording same, knowing that the amounts due under the [promissory note] were not satisfied 12 and their obligations thereunder, as well as in the Deed of Trust, remained outstanding.” Dkt. 1
13 ¶¶ 40–45; see also id. ¶¶ 19–27 (seeking cancellation of allegedly fraudulent instruments). 14 There are nine elements to a civil fraud claim: 15 (1) representation of an existing fact; (2) materiality; (3) falsity; (4) the speaker’s knowledge of its falsity; (5) intent of the speaker that it should be acted upon by the 16 plaintiff; (6) plaintiff’s ignorance of its falsity; (7) plaintiff’s reliance on the truth of the representation; (8) plaintiff’s right to rely upon it; and (9) damages suffered 17 by the plaintiff. Adams v. King County, 164 Wn.2d 640, 662, 192 P.3d 891 (2008) (quoting Stiley v. Block, 130 18 Wn.2d 486, 505, 925 P.2d 194 (1996)). “The absence of any element is fatal to a claim.” 19 Guarino v. Interactive Objects, Inc., 122 Wn. App. 95, 126, 86 P.3d 1175 (2004), as amended on 20 denial of reconsideration (June 30, 2004). 21 Here, while Lakeview sufficiently alleges that Defendants made false, material 22 representations and shows that Defendants plausibly knew those representations were false (see 23 Dkt. 1 at 4 ¶ 13), Lakeview does not allege that it was ignorant of the falsity of those statements 24 1 or that it relied on the truth of those statements in any way. Therefore, Lakeview’s fraud claim 2 fails for lack of the sixth, seventh, and eighth elements. If Lakeview intends to continue pursuing 3 a fraud claim against Defendants, it must file an amended complaint by January 29, 2026. If
4 Lakeview does not file an amended complaint by that time, the Court will dismiss the fraud 5 claim without prejudice. 6 d. Security interest 7 Finally, Lakeview seeks a declaration that it has a security interest in the Property 8 pursuant to the deed of trust and that its interest takes priority over any interests held by 9 Defendants or a third party. Dkt. 1 ¶¶ 46–55. 10 “A deed of trust creates a security interest in real property.” Brown v. Wash. State Dep’t 11 of Com., 184 Wn.2d 509, 515, 359 P.3d 771 (2015). This interest is perfected on the day the deed 12 of trust is recorded. See Olympic Coast Invs., Inc. v. U.S. Bank Nat. Ass’n, 101 Wn. App. 1003,
13 2000 WL 713932, at *2 (2000) (“A security interest in a promissory note and the deed of trust 14 securing it is created and perfected by endorsement and physical delivery of the note to the 15 secured party, and the recordation of an ‘assignment for security purposes’ of the deed of trust in 16 the real property records.”); RCW 7.28.230(3) (providing that a mortgage is “immediately 17 perfect[ed]” when it is recorded); RCW 61.24.020 (“[A] deed of trust is subject to all laws 18 relating to mortgages on real property.”). 19 Here, Lakeview has submitted copies of both Homebridge’s deed of trust and the 20 document assigning the deed of trust to Lakeview. Dkt. 1 at 20–43; Dkt. 15 at 10–33. This is 21 sufficient to support a claim that Lakeview has a security interest in the property that is senior to 22 interests perfected after the date it was recorded.
23 24 1 3. Sum of money at stake 2 Lakeview argues that the sum of money it seeks is appropriate because it is the amount 3 owed under the loan. Dkt. 14 at 4. Alongside the motion for default judgment, Lakeview supplies
4 a declaration by a representative from its loan servicer, who states that all of Defendants’ loan 5 payments beginning July 1, 2024 are past due, and that “[a]s of July 25, 2025, the total 6 indebtedness owed on the Loan secured by the Deed of Trust is not less than $343,336.39.” 7 Dkt. 15 at 3 ¶¶ 6–7. Lakeview submits a copy of the contract, which contains a provision naming 8 the principal and setting 6.625% yearly interest and a provision stating that a borrower in default 9 may be required to pay the full outstanding principal plus accrued interest upon notice from the 10 note holder. Id. at 6–8. It also submits copies of the deed of trust, the assignment of the deed of 11 trust, and the documents purporting to release Defendants’ mortgage and convey the Property. 12 Id. at 10–50.
13 In weighing the fourth Eitel factor—the sum of money at stake—“courts take into 14 account the amount of money requested in relation to the seriousness of the defendant’s conduct, 15 whether large sums of money are involved, and whether ‘the recovery sought is proportional to 16 the harm caused by defendant’s conduct.’” Getty Images (US), Inc. v. Virtual Clinics, No. C13- 17 0626JLR, 2014 WL 358412, at *4 (W.D. Wash. Jan. 31, 2014) (quoting Landstar Ranger, Inc. v. 18 Parth Enters., Inc., 725 F. Supp. 2d 916, 921 (C.D. Cal. 2010)). On a breach of contract claim, 19 this factor may be satisfied “when sufficient evidence is presented to support a sum of money 20 requested.” Boonkur, No. 3:25-CV-05220-TL, 2025 WL 3073089, at *5. 21 The Local Rules in this district provide further guidance as to what evidence is sufficient. 22 Under Local Rule 55, a plaintiff seeking default must submit “a declaration and other evidence
23 establishing plaintiff’s entitlement to a sum certain and to any nonmonetary relief sought.” Local 24 Rules W.D. Wash. LCR 55(b)(2). In addition, the plaintiff must “provide a concise explanation 1 of how all amounts were calculated, and shall support this explanation with evidence establishing 2 the entitlement to and amount of the principal claim, and, if applicable, any liquidated damages, 3 interest, attorney’s fees, or other amounts sought.” Local Rules W.D. Wash. LCR 55(b)(2)(A).
4 For a contract claim, the plaintiff must “provide the court with a copy of the contract and cite the 5 relevant provisions.” Id. 6 Lakeview’s documents provide sufficient documentation of the amount owed and how it 7 was calculated. This factor favors default judgment. 8 4. Possibility of dispute concerning material facts 9 Lakeview argues that there is no possibility of a dispute concerning material facts 10 because Defendants are in default. Dkt. 14 at 5; see Dkt. 12. 11 This factor favors default judgment because once the Clerk has entered default, “the 12 factual allegations of the complaint, except those relating to the amount of damages, will be
13 taken as true.” Geddes, 559 F.2d at 560. 14 5. Whether default was due to excusable neglect Lakeview argues that nothing in the record demonstrates that default was the result of 15 excusable neglect. Dkt. 14 at 5. The Court agrees. 16 “There is little possibility of excusable neglect when the plaintiff properly serves the 17 defendant and the defendant is aware of the litigation.” Mesa Underwriters Specialty Ins. Co. v. 18 Hulett, No. 2:21-CV-08284-MCS-KS, 2022 WL 17218505, at *6 (C.D. Cal. Oct. 26, 2022). 19 Lakeview has submitted documentation that Defendants were properly served with the summons 20 and complaint in this matter. Dkts. 8, 9. Defendants filed their motion over one month after 21 Lakeview moved for default judgment, and they provided no explanation for the delay. 22 See Dkt. 17. With no evidence in the record to support a finding of excusable neglect, this factor 23 favors default judgment. 24 1 6. Policy favoring decisions on the merits 2 Finally, the Court considers the general policy in favor of deciding cases on their merits. 3 “Although this factor ‘almost always disfavors the entry of default judgment,’ it is not
4 dispositive.” Curtis v. Illumination Arts, Inc., 33 F. Supp. 3d 1200, 1213 (W.D. Wash. 2014) 5 (quoting Vawter v. Quality Loan Serv. Corp. of Wash., No. C09-1585JLR, 2011 WL 1584424, at 6 *3 (W.D. Wash. Apr. 27, 2011)). Such is the case here: this factor weighs against default 7 judgment, but in light of the other factors favoring the entry of default judgment, the seventh 8 factor does not mandate that the case move forward. 9 B. The Court denies Defendants’ motion to deny and vacate this case, and the Court denies Lakeview’s motion to strike as moot. 10 Having determined that Lakeview is entitled to default judgment, the Court considers 11 Defendants’ motion to deny and vacate this case. In the motion, Defendants argue that the 12 Property “was the subject of mortgage fraud and securities fraud committed by [Homebridge]” 13 and that the release of mortgage was “duly enacted.” Dkt. 17 at 1–2. They contend that this 14 lawsuit “constitutes fraud upon the public record” and “is an attempt to misrepresent the standing 15 of [Lakeview], sidestep said duly enacted Release of Mortgage, abridge due process, and 16 unlawfully take [their] private property.” Id. at 2. 17 Lakeview argues that Defendants’ motion should be stricken under Federal Rule of Civil 18 Procedure 12(f) because it was filed after the deadline for a responsive pleading and after the 19 Clerk’s entry of default. Dkt. 19 at 3. Lakeview asserts that Defendants filed the motion in bad 20 faith and “admitt[ed] to the fraudulent activity alleged in Plaintiff’s complaint.” Id. at 1–4. In the 21 alternative, Lakeview argues that to the extent Defendants’ motion may be construed as a motion 22 to set aside the entry of default, there is not good cause to do so. Id. at 4–9. 23 24 1 Because Defendants are self-represented, the Court construes their motion liberally. 2 Lumumba v. Pierce County, No. 3:25-CV-05381-TMC, 2025 WL 2349148, at *2 (W.D. Wash. 3 Aug. 13, 2025); Erickson v. Pardus, 551 U.S. 89, 94 (2007). Defendants’ filing could be read as
4 either a motion to set aside default under Federal Rule of Civil Procedure 55(c) or a motion to 5 dismiss under Federal Rule of Civil Procedure 12(b)(6). The Court analyzes the motion under 6 both frameworks. 7 1. Defendants have not shown good cause to set aside the entry of default. 8 Rule 55(c) permits a court to “set aside an entry of default for good cause.” “The good 9 cause analysis considers three factors: (1) whether [the defendant] engaged in culpable conduct 10 that led to the default; (2) whether [the defendant] had a meritorious defense; or (3) whether 11 reopening the default judgment would prejudice [the plaintiff].” Franchise Holding II, LLC. v. 12 Huntington Restaurants Grp., Inc., 375 F.3d 922, 925–26 (9th Cir. 2004). Under this
13 “disjunctive” standard, “a finding that any one of these factors is true is sufficient reason for the 14 district court to refuse to set aside the default.” United States v. Signed Pers. Check No. 730 of 15 Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010). “A party in default bears the burden of 16 showing good cause.” Clarke v. TNSG Health Co., No. 24-3411, 2025 WL 2860597, at *2 (9th 17 Cir. Oct. 9, 2025). 18 Here, the second factor precludes a showing of good cause. A defendant seeking to 19 vacate a default judgment must “present the district court with specific facts that would 20 constitute a defense.” Franchise Holding, 375 F.3d at 926. However, “[a]ll that is necessary to 21 satisfy the ‘meritorious defense’ requirement is to allege sufficient facts that, if true, would 22 constitute a defense.” Mesle, 615 F.4th at 1094. Defendants allege that Homebridge sold the
23 mortgage on the Property to the Fannie Mae REMIC Trust 2022-74 before Lakeview filed suit, 24 and that Homebridge had tacitly acquiesced to the release of mortgage by failing to respond to 1 Defendants’ inquiries about that conveyance. Dkt. 17 at 2, 5, 7, 9. But this transaction—called 2 securitization—would not nullify the mortgage or Defendants’ obligations on the debt. 3 The deed of trust designates the Mortgage Electronic Registration System (“MERS”) as
4 Homebridge’s nominee, and it includes a “MERS Rider” permitting MERS to exercise certain 5 “rights, duties and obligations” on Homebridge’s behalf. Dkt. 1 at 21, 36–39. “MERS is a private 6 electronic database, operated by MERSCORP, Inc., that tracks the transfer of the ‘beneficial 7 interest’ in home loans, as well as any changes in loan servicers.” Cervantes v. Countrywide 8 Home Loans, Inc., 656 F.3d 1034, 1038 (9th Cir. 2011). Within the mortgage industry, “[i]t has 9 become common for original lenders to bundle the beneficial interest in individual loans and sell 10 them to investors as mortgage-backed securities, which may themselves be traded.” Id. at 1039. 11 These securitization transactions are “recorded only in the MERS database, not in county 12 records, because MERS continues to hold the deed on the new lender’s behalf.” Id.
13 Ultimately, “the securitization of a loan merely creates a separate contract distinct from” 14 any debt obligations under a promissory note. Deutsche Bank Nat. Tr. Co. v. Slotke, 192 Wn. 15 App. 166, 177 n.39, 367 P.3d 600 (2016). In other words, the loan repayment and deed of trust 16 are “distinct and separate from any securities transaction in the ‘secondary market’ 17 encompassing assignment” from Homebridge to Fannie Mae. In re Nordeen, 495 B.R. 468, 479– 18 80 (B.A.P. 9th Cir. 2013). Courts in this district have routinely rejected the argument that 19 mortgage securitization is fraudulent or invalidates any associated debts. See, e.g., Grubert v. 20 Caliber Home Loans Inc., No. 3:24-CV-05405-TMC, 2024 WL 4417288, at 4–5 (W.D. Wash. 21 Oct. 4, 2024) (rejecting a fraud claim based on mortgage securitization), reh’g denied, No. 3:24- 22 CV-05405-TMC, 2024 WL 4665427 (W.D. Wash. Nov. 4, 2024); Pearse v. First Horizon Home
23 Loan Corp., No. C16-5627 BHS, 2016 WL 5933518, at *7 (W.D. Wash. Oct. 12, 2016) 24 (“Plaintiff has failed to state a cognizable theory on how the securitization of his loan or the 1 inclusion of MERS as a beneficiary on the Deed of Trust could constitute fraud or render the 2 Note unenforceable.”), aff’d, 742 F. App’x 167 (9th Cir. 2018); Andrews v. Countrywide Bank, 3 NA, 95 F. Supp. 3d 1298, 1300–02 (W.D. Wash. 2015) (rejecting arguments that the sale of a
4 loan on secondary market affected obligations under a deed of trust and that MERS was unable 5 to assign the deed of trust). 6 Because Defendants have failed to raise a meritorious defense, the Court declines to set 7 aside the entry of default. 8 2. This case should not be dismissed under Rule 12(b)(6). 9 Under Rule 12(b)(6), a party may move to dismiss a case for “failure to state a claim 10 upon which relief can be granted.” A plaintiff seeking to withstand a motion to dismiss for 11 failure to state a claim must make the same showing as is required under the second and third 12 Eitel factors. See Kwan v. SanMedica Int’l, 854 F.3d 1088, 1096 (9th Cir. 2017) (stating that the
13 burden on the plaintiff opposing a motion to dismiss for failure to state a claim is to “allege 14 enough facts to state a claim to relief that is plausible on its face” (quoting Turner v. City & 15 Cnty. of San Francisco, 788 F.3d 1206, 1210 (9th Cir. 2015))). For the same reasons that the 16 Court outlined in Section V.A.2 of this Order, Defendants cannot succeed in dismissing the case 17 on this basis. And to the extent that Defendants challenge Lakeview’s standing (see Dkt. 17 at 2), 18 Lakeview has sufficiently alleged that it received assignment of the deed of trust and that it is 19 injured by Defendants’ failure to fully repay the loan. Dkt. 1 at 4, 40–43; Dkt. 15 ¶ 7; Friends of 20 the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 180–81 (2000) (listing the 21 requirements for standing under Article III of the U.S. Constitution). 22 Because Defendants’ motion fails as either a motion to set aside default or a motion to
23 dismiss, the Court DENIES the motion to deny and vacate this case. Accordingly, Lakeview’s 24 motion to strike is DENIED as moot. 1 C. Lakeview must provide supplemental declarations for the Court to determine appropriate remedies. 2 Under Federal Rule of Civil Procedure 55(b)(2), the Court may elicit additional 3 information from the parties for the purpose of conducting an accounting, determining the 4 amount of damages, establishing the truth of any allegation by evidence, or investigating any 5 other matter. The Court finds that further information is needed here. Below, the Court discusses 6 each of Lakeview’s requested remedies and the additional information required. Lakeview must 7 provide supplemental declarations containing this information no later than February 5, 2026. 8 1. Damages 9 On a successful breach of contract claim, “the injured party is entitled (1) to recovery of 10 all damages that accrue naturally from the breach, and (2) to be put into as good a pecuniary 11 position as he would have had if the contract had been performed.” Eastlake Const. Co. v. Hess, 12 102 Wn.2d 30, 39, 686 P.2d 465 (1984). In the complaint, Lakeview requested damages in the 13 amount of $333,822.88, which was the amount owing on the loan at that time. Dkt. 1 at 10. By 14 July 2025, that number had risen to $343,336.39. Dkt. 15 ¶ 7. The damages accruing naturally 15 from Defendants’ breach include both the amount owed on the principal and any interest. The 16 Court directs Lakeview to provide supplemental declarations supporting the amount owing on 17 the loan at the time that this Order is entered. See Fed. R. Civ. P. 55(b)(2)(B). 18 2. Cancellation of instruments 19 Lakeview seeks cancellation of the release of mortgage and subsequent conveyance of 20 the Property executed by Defendants. Dkt. 1 at 5–6. Lakeview argues that these documents were 21 fraudulently recorded and may injure Lakeview if a third party claims an interest in the Property. 22 Id. at 6 ¶ 25. Although Lakeview styles this request as a separate claim, cancellation of 23 instruments is an equitable remedy rather than a cause of action. See Bloor v. Fritz, 143 Wn. 24 1 App. 718, 739, 180 P.3d 805 (2008); Kwai Ling Chan v. Chase Home Loans Inc., No. C12- 2 0273JLR, 2012 WL 1252649, at *4 (W.D. Wash. Apr. 13, 2012). An equitable remedy for 3 breach of contract is available only “where there is no adequate remedy at law.” Egbert v. Way,
4 15 Wn. App. 76, 79, 546 P.2d 1246 (1976). 5 Lakeview has not sufficiently stated a claim for fraud, and it has not shown that damages 6 are an inadequate remedy for Defendants’ breach of contract. Moreover, the party to whom 7 Defendants conveyed the Property is not a party to this action.1 In any amended pleading that 8 Lakeview may choose to file, it may submit additional allegations as to why cancellation of 9 instruments is a necessary remedy. If Lakeview continues to pursue that remedy, the Court may 10 also require supplemental briefing on its power to order cancellation of instruments as a remedy 11 for the claims brought in this lawsuit between these parties. 12 3. Declaratory relief 13 “In a case of actual controversy within its jurisdiction . . . any court of the United States, 14 upon the filing of an appropriate pleading, may declare the rights and other legal relations of any 15 interested party seeking such declaration, whether or not further relief is or could be sought.” 16 28 U.S.C. § 2201. “Declaratory relief is an equitable remedy, whose distinctive characteristic is 17 that it allows adjudication of the parties’ rights and obligations on a matter in dispute regardless 18 of whether claims for damages or injunctive relief have yet arisen.” Oregon ex rel. Dep’t of 19 Transp. v. Heavy Vehicle Elec. License Plate, Inc., 198 F. Supp. 2d 1202, 1206 (D. Or. 2002). 20 “The party seeking declaratory relief must show that an actual controversy exists; this 21 requirement is the same as the ‘case or controversy’ requirement of Article III of the United 22 1 In the motion for default judgment and motion to strike, Lakeview argues that Defendants 23 purported to convey the Property to themselves, but Lakeview does not point to any evidence in the record or allegations in the complaint that support that assertion. See Dkt. 14 at 4; Dkt. 19 at 24 2. 1 States Constitution.” Id. “Declaratory relief is . . . a remedy available for breach of contract, but 2 it is not a stand-alone claim.” Billingsley v. MV Transp., Inc., 242 F. Supp. 3d 1011, 1018 (E.D. 3 Cal. 2017).
4 Pointing to the release of mortgage executed by Defendants, Lakeview claims that 5 “[t]here is an actual controversy between Plaintiff and Defendants as to the priority and status of 6 Plaintiff’s lien and Deed of Trust.” Dkt. 1 at 9 ¶ 52. Defendants’ motion similarly suggests that 7 there is a conflict over the validity of the deed of trust. Dkt. 17 at 2. 8 Lakeview requests several declarations from the Court. First, Lakeview seeks 9 a declaration of the rights of Plaintiff and Defendants, and each of them, including a declaration that Plaintiff’s Deed of Trust is a valid encumbrance against the 10 Property as of April 27, 2005 and senior to any interest held by the Defendants, and each of them, or any subsequent lienholder, encumbrancer, or creditor, who 11 purports to take from the Defendants and each of them after as of April 27, 2005. Dkt. 1 at 10. It is not clear from the record why April 27, 2005 is a significant date. Lakeview 12 must submit additional declarations if it wishes to obtain this remedy. Fed. R. Civ. P. 13 55(b)(2)(D). 14 Next, Lakeview seeks “a declaration that the Fraudulent Release of Mortgage and 15 Fraudulent Reconveyance were fraudulently recorded,” id. at 10; a declaration that those 16 instruments “are hereby cancelled and are null, void, and of no force or effect, as of the original 17 recording dates of the respective instruments,” id. at 11; and “a declaration that the recording of 18 the Fraudulent Release of Mortgage and Fraudulent Reconveyance had no adverse effect 19 whatsoever on the Deed of Trust.” Id. Relatedly, it seeks 20 a declaration authorizing Plaintiff to record a judgment cancelling the Fraudulent 21 Release of Mortgage and Fraudulent Reconveyance as of each respective original recording date, or, in the alternative, a declaration authorizing Plaintiff to record a 22 judgment declaring that the Fraudulent Release of Mortgage and Fraudulent Reconveyance are cancelled and of no force or effect with the Clallam County 23 Recorder’s Office. 24 1 Id. Because Lakeview has not stated a claim for fraud, and because the party to whom defendants 2 conveyed the Property is not a party to this suit, these requested declarations are unavailable at 3 this time. Lakeview may seek this relief in any amended pleading it wishes to file.
4 Next, Lakeview seeks “a declaration that the Deed of Trust is a valid and enforceable first 5 in priority lien which continued and continues to encumber the Property as of its original 6 recording date of October 3, 2022.” Id. As explained above, the Court agrees with Lakeview that 7 the deed of trust is a valid security interest on the Property. However, the Court has noticed 8 discrepancies in the record as to the deed of trust’s recording date. See id. at 20; Dkt. 15 at 10. 9 The Court directs Lakeview to submit supplemental declarations explaining these discrepancies. 10 Fed. R. Civ. P. 55(b)(2)(C). 11 Finally, Lakeview seeks “a declaration that Defendants are in monetary default under the 12 terms and obligations of the Note and Deed of Trust.” Dkt. 1 at 11. Because Lakeview succeeds
13 on its breach of contract claim, this declaratory relief is appropriate. 14 D. Lakeview has not shown that it is entitled to an award of attorney’s fees and costs. 15 1. Lakeview has not shown that it is entitled to attorney’s fees incurred in 16 bringing this action. 17 Lakeview argues that it is entitled to an award of attorney’s fees and costs under the 18 terms of the loan contract and deed of trust. Dkt. 14 at 5–6. It cites two provisions of the deed of 19 trust in support of this request. Id. 20 Lakeview may only recover attorney’s fees if the underlying contract “specifically 21 provides for such an award.” Terhune v. N. Cascade Tr. Servs., Inc., 9 Wn. App. 2d 708, 728, 22 446 P.3d 683 (2019). The provisions that Lakeview cites do not do so. The first provision states 23 that in “a legal proceeding that might significantly affect Lender’s interest in the Property and/or 24 rights under this Security Instrument”—like a bankruptcy or probate proceeding—the lender 1 may “do and pay for whatever is reasonable or appropriate” to protect its rights and interests, 2 including paying “reasonable attorneys’ fees,” and that amounts disbursed by the lender under 3 these circumstances may be added to the borrower’s debt. Dkt. 1 at 25–26. It does not
4 specifically provide that the lender may recover attorney’s fees and costs in a suit against the 5 borrower. The second provision permits the lender to recover attorney’s fees from the borrower 6 following acceleration of the loan. Id. at 29. It requires the lender to “give notice to Borrower 7 prior to acceleration following Borrower’s breach of any covenant or agreement in this Security 8 Instrument.” Id. There is no evidence in the record that the loan was accelerated or that 9 Defendants were provided notice of such. See Terhune, 9 Wn. App. 2d at 728. Therefore, neither 10 of these provisions supports an award of attorney’s fees here. 11 2. Lakeview has not shown that it is entitled to attorney’s fees incurred in litigating the motion to strike. 12 Lakeview also seeks the attorney’s fees and costs that it incurred in litigating the motion 13 to strike. Dkt. 19 at 10–11. Citing Western District of Washington Local Rule 11(c), it argues 14 that such fees are warranted because Defendants acted in bad faith. Id. 15 Under Local Rule 11(c), 16 An attorney or party who without just cause fails to comply with any of the Federal 17 Rules of Civil or Criminal Procedure, these rules, or an order of the court, or who presents to the court unnecessary motions or unwarranted opposition to motions, or 18 who fails to prepare for presentation to the court, or who otherwise so multiplies or obstructs the proceedings in a case may, in addition to or in lieu of the sanctions 19 and penalties provided elsewhere in these rules, be required by the court to satisfy personally such excess costs and may be subject to such other sanctions as the court 20 may deem appropriate. Local Rules W.D. Wash. LCR 11(c). Here, Lakeview has submitted no evidence to support the 21 assertion that Defendants acted in bad faith or without just cause simply by failing to file a 22 responsive pleading and then filing an untimely motion some months later. Moreover, Lakeview 23 has not shown that it complied with Federal Rule of Civil Procedure 11(c)(2), which provides 24 1 that “[a] motion for sanctions must be made separately from any other motion and must describe 2 the specific conduct that allegedly violates Rule 11(b),” and that a motion for sanctions “must 3 not be filed or be presented to the court if the challenged paper, claim, defense, contention, or
4 denial is withdrawn or appropriately corrected within 21 days after service or within another time 5 the court sets.” See Washeleski v. Monazamfar, No. 25-CV-03135-EKL, 2025 WL 3514600, at 6 *7 (N.D. Cal. Dec. 8, 2025) (“[B]efore filing a motion for sanctions, the moving party must 7 comply with Rule 11’s safe harbor provision by serving the motion on the opposing party at least 8 21 days before filing it with the court.”). Because Lakeview has not made this showing, it has not 9 demonstrated that it is entitled to an award of attorney’s fees incurred in litigating the motion to 10 strike. 11 VI. CONCLUSION For the reasons explained above, the Court ORDERS as follows: 12 1. The motion for entry of default judgment (Dkt. 14) is GRANTED IN PART and 13 DENIED IN PART. 14 2. The Court DECLARES that Defendants are in monetary default under the terms 15 and obligations of the loan repayment agreement and the deed of trust. 16 3. The Court ORDERS Plaintiff to file supplemental declarations regarding the 17 amount of contract damages and Plaintiff’s requests for declaratory relief no later 18 than February 5, 2026. 19 4. Plaintiff’s claim for unjust enrichment is DISMISSED with prejudice. 20 5. If Plaintiff wishes to continue pursuing a fraud claim, Plaintiff must file an 21 amended complaint no later than January 29, 2026. Defendants must file any 22 responsive pleadings within 21 days of service of the amended complaint. Fed. R. 23 Civ. P. 12(a)(1). 24 1 6. Defendants’ motion to deny and vacate this case (Dkt. 17) is DENIED. 2 7. Plaintiff's motion to strike (Dkt. 19) is DENIED as moot. 3 The Clerk is directed to send uncertified copies of this Order to all counsel of record and 4 || to any party appearing pro se at said party’s last known address. 5 Dated this 15th day of January, 2026. Eg KS 7 TiffanyM. Cartwright United States District Judge 8 9 10 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 ORDER ON PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT, DEFENDANTS" MOTION TO DENY AND