Deutsche Bank National Trust Co. v. Valerie J. Slotke
192 Wash. App. 166
Wash. Ct. App.2016Background
- Valerie Slotke executed a 2006 promissory note and deed of trust secured by Pierce County real property; she defaulted in 2010.
- The Lending Center originally was payee; it indorsed the note and an assignment of the deed of trust was recorded in favor of Deutsche Bank.
- Deutsche Bank, in possession of the original indorsed note, sued in superior court seeking a money judgment on the note and judicial foreclosure of the deed of trust.
- At summary judgment Deutsche Bank produced an affidavit and the original note for inspection; the trial court granted summary judgment and entered a decree of foreclosure with a money judgment and sheriff’s sale/redemption period.
- Slotke appealed, arguing Deutsche Bank lacked ownership/beneficial interest and that it improperly sought to enforce the note and foreclose simultaneously.
Issues
| Issue | Plaintiff's Argument (Slotke) | Defendant's Argument (Deutsche Bank) | Held |
|---|---|---|---|
| Authority to foreclose judicially | Deutsche Bank was not the owner of the beneficial interest in the note and thus not entitled to foreclose | As holder in possession of the indorsed note, Deutsche Bank is entitled to enforce the note and judicially foreclose the deed of trust | Holder of the note may enforce the note and judicially foreclose; Deutsche Bank, as holder in possession, had authority to proceed |
| Requirement of ownership (beneficial interest) | Foreclosure requires proof the beneficiary/foreclosing party owns the beneficial interest in the note | Ownership not required; UCC and precedent allow a holder to sue/enforce even if not owner | Rejected: ownership not required to be a person entitled to enforce under UCC and Washington precedent |
| Simultaneous enforcement of note and foreclosure | Seeking a money judgment on the note and foreclosing the deed of trust at the same time is barred as simultaneous actions | RCW 61.12.120 bars two separate actions; but a single foreclosure action may include enforcement of the note | Permitted: statute prohibits maintaining two separate actions simultaneously, but does not forbid pleading or enforcing the note in the foreclosure action itself |
| Proof of possession/entitlement | Indorsements and trust securitization issues show Deutsche Bank lacked proper possession or title to enforce | Deutsche Bank presented the original indorsed note and maintained possession; holder-in-possession is sufficient | Evidence of possession (original indorsed note) was sufficient to establish status as holder entitled to enforce |
Key Cases Cited
- John Davis & Co. v. Cedar Glen No. Four, Inc., 75 Wn.2d 214 (1969) (holder of negotiable instrument may sue in own name; need not prove beneficial ownership to enforce)
- Trujillo v. Northwest Trustee Servs., Inc., 181 Wn. App. 484 (2014) (reiterating holder-in-possession authority to enforce note under UCC)
- Bain v. Metro. Mortg. Grp., Inc., 175 Wn.2d 83 (2012) (security instrument follows the note; discussion in nonjudicial foreclosure context)
- Rustad Heating & Plumbing Co. v. Waldt, 91 Wn.2d 372 (1979) (deed of trust is a species of mortgage)
- Helbling Bros., Inc. v. Turner, 14 Wn. App. 494 (1975) (deeds of trust act allows election to foreclose under deed of trust procedures or as a mortgage)