Bavand v. OneWest Bank, FSB
176 Wash. App. 475
| Wash. Ct. App. | 2013Background
- In 2007 Bavand took a mortgage from IndyMac secured by a deed of trust naming MERS as beneficiary and Ticor as trustee; the note remained with IndyMac (no showing MERS or OneWest held the original note).
- On Dec. 15–16, 2010 OneWest executed an "Appointment of Successor Trustee" purporting to appoint Regional Trustee Services (RTS); the next day MERS executed an assignment purporting to convey all beneficial interest to OneWest.
- RTS initiated a nonjudicial foreclosure and scheduled a trustee’s sale for May 13, 2011; Bavand sued and obtained a TRO (conditioned on bond she did not post); RTS conducted the sale on June 17, 2011 and conveyed title to OWB REO, Inc.
- The trial court granted OneWest and MERS’s CR 12(b)(6) dismissal and validated the trustee’s sale; Bavand appealed.
- The court of appeals examined (1) whether OneWest/MERS met the CR 12(b)(6) burden, focusing on statutory authority to appoint a successor trustee, and (2) whether Bavand stated CPA and quiet-title claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bavand pleaded sufficient facts to survive CR 12(b)(6) that RTS was invalidly appointed as successor trustee | OneWest’s appointment of RTS was invalid because OneWest was not beneficiary when it executed the appointment; MERS never held the note and thus could not cure the defect | OneWest/MERS argued waiver, compliance with statutes, and that assignments/records showed beneficiary status | Court: Bavand stated sufficient facts; OneWest was not beneficiary at appointment date and MERS never held the note, so appointment was invalid; CR 12(b)(6) dismissal mostly erroneous |
| Validity of the June 17, 2011 trustee’s sale | Sale invalid because successor-trustee appointment was materially defective and RTS therefore lacked authority to foreclose | Defendants argued the sale and appointment were valid and that Bavand waived challenges by not strictly following injunction procedures | Court: Trustee’s sale validation reversed; sale was wrongful due to statutory noncompliance in appointment |
| Quiet title claim to extinguish deed-of-trust lien | Bavand sought to extinguish the lien arguing the deed of trust was severed from the note | Defendants argued plaintiff cannot quiet title based on weakness of adversary’s claim; quiet title must be won on strength of plaintiff’s title | Court: Dismissal affirmed — Bavand did not plead superiority of her own title (claim sought relief based on defendants’ defects) |
| Washington Consumer Protection Act (CPA) claim | Defendants’ misrepresentations (MERS listed as beneficiary though not a holder; OneWest falsely represented beneficiary status; improper appointment/assignment practices) were deceptive, affected the public, and caused injury (loss of property) | Defendants argued lack of public interest impact, absence of actionable deceptive practice, no injury or causation, and that plaintiff failed to mitigate | Court: CPA claim sufficiently pleaded as to OneWest and MERS (and remanded RTS claim); dismissal improper because unfair/deceptive practices and public-interest impact were plausibly alleged and injury/causation disputed factual issues |
Key Cases Cited
- Bain v. Metropolitan Mortgage Group, Inc., 175 Wn.2d 83 (2012) (MERS cannot be a lawful statutory "beneficiary" if it never held the promissory note; its presence can be deceptive)
- Schroeder v. Excelsior Mgmt. Group, LLC, 177 Wn.2d 94 (2013) (failure to comply with Deeds of Trust Act can make a nonjudicial foreclosure unlawful and satisfy CPA deceptive-act element)
- Albice v. Premier Mortg. Servs. of Wash., Inc., 174 Wn.2d 560 (2012) (waiver under Deeds of Trust Act is an equitable doctrine and not rigidly applied to postsale challenges)
- Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778 (1986) (elements and injury requirement for Washington CPA claims)
- Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27 (2009) (CPA injury need not involve actual deception; proximate causation and unquantified injury may suffice)
- Walker v. Quality Loan Serv. Corp. of Wash., 176 Wn. App. 294 (2013) (recognizes causes of action under the Deeds of Trust Act and rejects narrow "no wrongful foreclosure cause" reading)