John P. Hurney And Leslie A. Hurney v. Hsbc Bank, Usa., N.a.
75043-7
| Wash. Ct. App. | Jun 5, 2017Background
- In 2005 the Hurneys borrowed $825,000 from IndyMac, secured by a deed of trust; note later modified and principal increased.
- IndyMac sold the loan into a securitized trust for which HSBC is trustee; IndyMac endorsed the note to HSBC and then in blank; OneWest later obtained servicing rights and physical custody of the original note.
- IndyMac failed in 2008; FDIC sold assets to OneWest, which began servicing the Hurney loan in 2009; Hurney defaulted in 2009.
- In March 2010 MERS assigned beneficial interest to HSBC; OneWest (as servicer/agent) appointed Regional Trustee Services (RTS) successor trustee and a trustee sale was scheduled but delayed by borrower bankruptcy.
- After bankruptcy dismissal, foreclosure resumed (2013–2014); Hurneys sued to enjoin the trustee’s sale and asserted claims under the Deeds of Trust Act and the Consumer Protection Act (CPA); summary judgment dismissed all claims except CPA was litigated and then also dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants engaged in unfair/deceptive acts in foreclosure process (CPA) | Hurney: banks misrepresented identity of the noteholder, lacked authority to appoint successor trustee, and acted deceptively in foreclosure documents | Banks: OneWest possessed the original note, acted as HSBC’s agent/attorney-in-fact, and had authority to appoint trustee and conduct foreclosure; documents submitted show holder status | Summary judgment for banks — no genuine issue that OneWest/HSBC acted unfairly or deceptively |
| Whether possession/endorsement evidence sufficient to prove holder status | Hurney: banks presented no proof OneWest/HSBC were noteholders | Banks: produced the original note endorsed in blank and affidavits/declarations showing OneWest had custody and acted for HSBC | Court: presentation of original note and declarations established holder/agency status; Hurney failed to rebut |
| Whether MERS’s assignment or characterization of "beneficial interest" created deception/injury | Hurney: MERS’s assignment and statements were misleading and caused injury | Banks: MERS’s statements irrelevant because possession of the note, not MERS assignment, controlled authority; no causal injury shown | Court: MERS’s assignment did not create a CPA violation here; no causal injury shown |
| Whether beneficiary/foreclosure mediation documents violated proof-of-beneficiary requirements | Hurney: certain beneficiary declarations and mediation forms failed to comply with statutory proof requirements and were deceptive | Banks: documents either postdated the challenged actions, were for mediation, and/or OneWest legitimately represented HSBC at mediation | Court: Hurney offered no evidence mediator relied on inadequate proofs or was misled; no actionable CPA claim shown |
Key Cases Cited
- Frias v. Asset Foreclosure Servs., Inc., 334 P.3d 529 (Wash. 2014) (borrower cannot recover damages under deeds of trust act absent completed trustee’s sale)
- Trujillo v. Nw. Tr. Servs., Inc., 355 P.3d 1100 (Wash. 2015) (wrongful conduct in foreclosure that does not result in sale may support CPA claim)
- Brown v. Dep’t of Commerce, 359 P.3d 771 (Wash. 2015) (holder of note entitled to enforce obligation; declaration of holder may satisfy proof requirements)
- Bain v. Metro. Mortg. Grp., Inc., 285 P.3d 34 (Wash. 2012) (deed of trust follows the note; MERS cannot enforce where it does not hold the note)
- Bavand v. OneWest Bank, FSB, 309 P.3d 636 (Wash. Ct. App. 2013) (appointment of successor trustee by an entity that is neither beneficiary nor noteholder may be invalid)
- Bavand v. OneWest Bank, FSB, 385 P.3d 233 (Wash. Ct. App. 2016) (even if MERS’s assignment is presumptively deceptive, lack of causal injury can defeat CPA claim)