John R. Wilson And Jacqueline v. Quality Loan Service Corp.
74705-3
| Wash. Ct. App. | Apr 17, 2017Background
- In 2005 the Wilsons executed a $567,000 promissory note secured by a deed of trust naming Washington Mutual (WaMu) as beneficiary and Talon Group as trustee.
- FDIC closed WaMu in 2008 and transferred WaMu's loans and loan commitments to JPMorgan Chase (Chase). The Wilsons defaulted in 2010.
- In May 2011 Chase sent a foreclosure transmittal package to Quality Loan Service Corp. of Washington (Quality). Chase appointed Quality successor trustee in October 2012; Quality recorded notices of default and trustee’s sale but postponed sales and no sale occurred.
- Chase executed a beneficiary declaration stating it was the holder of the note; Quality relied on that declaration and the transmittal package when pursuing nonjudicial foreclosure.
- The Wilsons sued Quality and its counsel (McCarthy & Holthus) under the Deeds of Trust Act (DTA) and the Consumer Protection Act (CPA). The trial court granted summary judgment for defendants; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chase was the holder/beneficiary with authority to appoint a successor trustee | Wilsons: WaMu likely sold the note to a securitized trust before FDIC transfer, so Chase was not holder | Defendants: FDIC purchase-and-assumption transferred WaMu loans to Chase; Chase was entitled to enforce the note | Held: Chase was the holder—FDIC transfer vested enforcement rights in Chase; no genuine factual dispute |
| Whether Quality violated DTA/CPA by relying on Chase’s beneficiary declaration without further inquiry | Wilsons: Quality should have independently investigated; reliance was unfair/deceptive | Defendants: RCW 61.24.030(7)(a) permits a beneficiary’s sworn declaration as sufficient proof; Chase’s declaration and transmittal package unambiguously established holder status | Held: No violation—reliance on Chase’s unambiguous declaration satisfied trustee’s duty of good faith |
| Whether Quality failed to maintain a Washington physical address and telephone as required by statute | Wilsons: Quality’s Washington office was inaccessible at times (Poulsbo/Seattle move), violating RCW 61.24.030(6) and supporting CPA claim | Defendants: Quality moved offices and had physical presence; any gaps did not cause plaintiffs’ injury | Held: Even assuming intermittent noncompliance, Wilsons failed to show they were injured by it, so CPA claim fails |
| Whether Quality’s alleged partiality (shared space/employees with counsel) or discovery/forgery allegations create triable issues | Wilsons: Shared space with counsel and other procedural irregularities show bias and misconduct | Defendants: No evidence McCarthy & Holthus represented Chase here or that relationship affected duties; many claims raised only on appeal or outside record | Held: No genuine factual dispute in record; appellate court declines to consider materials not presented below; summary judgment affirmed |
Key Cases Cited
- Frias v. Asset Foreclosure Servs., Inc., 181 Wn.2d 412 (2014) (DTA does not create independent damages action absent completed trustee's sale)
- Lyons v. U.S. Bank Nat'l Ass'n, 181 Wn.2d 775 (2015) (CPA claim may be based on alleged DTA violations)
- Walker v. Quality Loan Serv. Corp., 176 Wn. App. 294 (2013) (trustee lacks authority to foreclose if successor trustee appointed by unlawful beneficiary)
- Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778 (1986) (summary judgment and evidentiary standards)
- Bavand v. OneWest Bank, F.S.B., 176 Wn. App. 475 (2013) (requirements for beneficiary authority and successor trustee appointment)