Frias v. Asset Foreclosure Services, Inc.
181 Wash. 2d 412
| Wash. | 2014Background
- Florence Frias defaulted on a deed-of-trust–secured loan, received notices of default and trustee’s sale, and pursued loan modification and mediation under Washington foreclosure statutes.
- A trustee’s sale was held where U.S. Bank was high bidder, but the deed was not issued and the sale was later voided; no completed foreclosure transferring title occurred.
- Frias alleges trustees and servicers demanded unreasonable/illegal fees, refused to mediate in good faith, caused extra mediation costs, and left her uncertain about title and loan status. She alleges emotional distress and property-related injuries.
- Frias sued under the Deeds of Trust Act (DTA), RCW ch. 61.24, and the Consumer Protection Act (CPA), RCW ch. 19.86; defendants moved to dismiss for failure to state a claim.
- The federal district court dismissed both claims; after an intermediate appellate decision (Walker) the district court certified two questions to the Washington Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DTA implies an independent cause of action for monetary damages absent a completed trustee’s sale | Frias: RCW 61.24.127 preserves damages claims and should be read to allow pre-sale damages actions | Defendants: DTA provides no pre-sale damages remedy; RCW 61.24.127(2) contemplates claims tied to a completed sale | No — DTA does not create an independent pre-sale monetary damages claim |
| Whether DTA violations may support a CPA claim before a completed trustee’s sale | Frias: DTA violations (bad-faith mediation, illegal fees) injured her business/property and thus fit CPA injury requirements | Defendants: Without sale or payment of fees there is no cognizable property/business injury under the CPA | Yes — under ordinary CPA principles DTA violations can be actionable pre-sale if plaintiff pleads cognizable injury to business or property |
| Whether RCW 61.24.127 changes CPA accrual or elements when CPA is premised on DTA violations | Frias: RCW 61.24.127 preserves remedies and should allow CPA claims | Defendants: RCW 61.24.127(2) limits nonwaived claims and could restrict CPA claims | No change — CPA claims remain governed by ordinary CPA doctrines; RCW 61.24.127 preserves CPA remedies |
| Scope of judicial review and use of extrinsic policy evidence | Frias/Amici: courts may consider policy/factual materials about foreclosure impacts | Defendants: statutory construction should not rely on unrelated factual or policy submissions | Court: Declines to consider unrelated factual/policy materials; confines decision to statutory construction and certified record |
Key Cases Cited
- Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11 (U.S. 1979) (framework for deciding whether a statute implies a private cause of action)
- Bennett v. Hardy, 113 Wn.2d 912 (Wash. 1990) (three-part test for implying a statutory remedy)
- Ducote v. Dep’t of Soc. & Health Servs., 167 Wn.2d 697 (Wash. 2009) (statute may create causes of action expressly or by implication)
- Bain v. Metro. Mortgage Group, Inc., 175 Wn.2d 83 (Wash. 2012) (courts should not adopt policy-making roles better left to legislature)
- Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778 (Wash. 1986) (elements and injury requirement for CPA claims)
- Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27 (Wash. 2009) (CPA injury limited to business/property; personal distress excluded; injury can include costs incurred investigating unlawful demands)
- Klem v. Washington Mut. Bank, 176 Wn.2d 771 (Wash. 2013) (CPA injury where wrongful acts cut off borrower’s economic opportunity)
- Mason v. Mortgage America, Inc., 114 Wn.2d 842 (Wash. 1990) (CPA injury may be minimal/temporary)
- Udall v. T.D. Escrow Servs., Inc., 159 Wn.2d 903 (Wash. 2007) (DTA interpretation cannot be premised on an act that causes no injury to borrower’s property interests)
- Schroeder v. Excelsior Mgmt. Grp., LLC, 177 Wn.2d 94 (Wash. 2013) (articulates DTA purposes: efficiency/cost, prevention of wrongful foreclosures, and land-title stability)
- Cox v. Helenius, 103 Wn.2d 383 (Wash. 1985) (same statement of DTA objectives)
- Brown v. Household Realty Corp., 146 Wn. App. 157 (Wash. Ct. App. 2008) (pre-RCW 61.24.127 precedent on waiver of damages claims when sale not enjoined)