21st Mortgage Corp. v. Linda C. Nicholls Duncan K. Robertson
75262-6
| Wash. Ct. App. | Sep 11, 2017Background
- Linda Nicholls executed a 1999 first-priority promissory note secured by a deed of trust on Seattle property; the loan was later pooled and transferred through multiple entities and securitizations.
- 21st Mortgage Company (21st) was designated servicer for the trust holding the loan and filed a judicial foreclosure in 2014, claiming possession of the original note.
- Duncan Robertson held a junior loan on the same property, foreclosed nonjudicially in 2008, purchased the property at the sale, and later defaulted on that junior loan; disputes over title and prior proceedings existed in related federal litigation.
- Robertson opposed 21st’s summary judgment with an expert affidavit (James Kelley) opining the promissory note and allonges are not original and include copied signatures, creating a factual dispute about who is the note’s holder.
- The trial court granted summary judgment to 21st, found the 2008 trustee sale invalid (so Robertson did not own the property), struck Robertson’s affirmative defenses, and certified the orders for appeal; the Court of Appeals reviewed those rulings.
Issues
| Issue | Plaintiff's Argument (21st) | Defendant's Argument (Robertson) | Held |
|---|---|---|---|
| Is 21st the holder entitled to enforce the promissory note? | 21st possesses the original note and thus may enforce it. | Kelley’s affidavit shows the note is a copy and raises a genuine factual dispute about possession and authenticity. | Reversed in part: Kelley’s affidavit creates a genuine issue of material fact whether 21st is the holder. |
| Are the allonges/endorsements authentic and establish chain of title? | Endorsements demonstrate negotiation history and in-blank endorsements supporting 21st’s possession. | Allonges were not permanently affixed; signatures appear copied — they may be fraudulent, undermining chain of title. | The affidavit raises factual issues about the allonges; summary judgment inappropriate on this basis. |
| Did Robertson acquire title at the 2008 trustee’s sale? | 21st asserted the 2008 sale was invalid; thus Robertson did not obtain title. | Robertson contended he purchased the property at the 2008 sale and owns it. | Court declined to resolve on appeal because Robertson’s ownership status is immaterial to whether foreclosure may proceed; that portion not reached. |
| Were Robertson’s affirmative defenses properly stricken (statute of limitations and standing)? | 21st: statute of limitations defeated because payments in 2009 tolled/revivified claim; 21st has standing if it is the holder. | Robertson: limitations barred the claim; 21st lacks standing if it does not hold the original note. | Statute of limitations defense properly struck (no evidence limitations had run); striking standing defense was error because Kelley affidavit raises a genuine issue about holder/standing. |
Key Cases Cited
- Deutsche Bank Nat. Trust Co. v. Slotke, 367 P.3d 600 (discussing holder status and judicial foreclosure) (Wash. Ct. App.)
- Bavand v. OneWest Bank, 385 P.3d 233 (treatment of declarations re: note possession in summary judgment) (Wash. Ct. App.)
- BAC Home Loans Servicing, LP v. Fulbright, 328 P.3d 895 (relation of junior interest to foreclosure and entitlement to surplus) (Wash.)
- Ranger Ins. Co. v. Pierce County, 192 P.3d 886 (summary judgment standard and requirement to show specific facts creating genuine issues) (Wash.)
- Joy v. Dep't of Labor & Indus., 285 P.3d 187 (issues forfeited by lack of developed argument) (Wash. Ct. App.)