317 P.3d 1047
Wash. Ct. App.2013Background
- Foreclosure rescue scheme; trial court quieted title in homeowners; City First and U.S. Bank appealing; undisclosed pretrial Mullen-Collings settlement at issue; Loveless caused equity skimming; U.S. Bank asserted superior lien in equity proceeding; jury found City First and Loveless liable under CCOA and related acts; U.S. Bank argued its deed of trust remained viable and superior; trial court granted damages and fees to plaintiffs; appellate court affirmed across claims.
- Loveless and Collings executed sale-leaseback with a prohibition on HELOCs; Loveless later refinanced and obtained HELOC in violation; this led to equity skimming findings and a constructive trust in Collings’ favor.
- U.S. Bank sought to enforce the December 2006 Loveless Loan through a securitized trust; Collings asserted a constructive trust and superior equitable interest in the property.
- Trial court found Loveless’s actions violated equity-skimming and City First liable; court quieted title in Collings against U.S. Bank; City First appealed denial of new trial and liability rulings.
- Court addressed standing and bona fide purchaser/encumbrancer issues for U.S. Bank; ultimately held U.S. Bank was not a bona fide purchaser and affirmed title quieting in Collings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Undisclosed settlement prejudice | City First: nondisclosure prejudiced trial as Mary Carter-type. | City First: nondisclosure tainted verdict; settlement showed collusion. | No reversible prejudice; no abuse of discretion in denying new trial. |
| Sufficiency of evidence on vicarious liability | Collings: City First liable for Loveless/Mullen acts. | City First: insufficient basis for vicarious liability. | Sufficient evidence supports vicarious liability for Loveless’s acts. |
| Attorney fees award validity | Collings: lodestar plus 1.2 multiplier appropriate. | City First: fees excessive; improper allocation; multiplier contested. | Fee award upheld under lodestar methodology with multiplier supported. |
| Credit Services Organizations Act coverage | Collings: City First branches not licensed; Act applicable. | City First: exemption for licensed entities; improper instruction. | Court correctly applied each-branch licensing interpretation; Act coverage affirmed. |
Key Cases Cited
- Davis v. Microsoft Corp., 149 Wn.2d 521 (Wash. 2003) (Davis adopted Baldwin exception for general verdicts when no timely special verdict form)
- McCluskey v. Handorff-Sherman, 68 Wn. App. 96 (Wash. App. 1992) (undisclosed agreements may require pretrial disclosure to avoid prejudice)
- Ward v. Ochoa, 284 So.2d 385 (Fla. 1973) (Mary Carter-type concerns require disclosure to jury; many jurisdictions favor disclosure)
- Monti v. Wenkert, 287 Conn. 101 (Conn. 2008) (posttrial undisclosed agreement; prejudice depends on timing and alignment)
- Yamamoto v. Puget Sound Lumber Co., 84 Wash. 411, 146 P. 861 (Wash. 1915) (Baldwin principle on multifactor theories; later Davis exception applied)