500 P.3d 171
Wash. Ct. App.2021Background
- Eng bought a property in 2006 and obtained a second loan (~$67,990); she stopped paying that loan by at least November 1, 2008.
- Specialized Loan Servicing (SLS) began servicing the loan in March 2019 and sent a July 2019 Default Notice/Notice of Intent to Foreclose demanding ~ $88–89k to cure and threatening foreclosure if not paid; SLS had not accelerated the note.
- Eng sued mid‑October 2019 alleging violations of the Consumer Protection Act (CPA), the Collection Agency Act (CAA), and negligence; the trial court granted SLS’s CR 12(b)(6) motion and dismissed the complaint without prejudice.
- On appeal Eng argued SLS’s foreclosure notice was deceptive because it demanded past‑due installments without disclosing that some installments were time‑barred and thus unenforceable under the six‑year statute of limitations.
- The Court of Appeals held the CPA claim survived a 12(b)(6) challenge (omission could mislead a reasonable consumer about a statute‑of‑limitations defense) but affirmed dismissal of the CAA and negligence claims; the case was remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CAA §19.16.250(16) — unlawful threat | Eng: threatening foreclosure on amounts including time‑barred installments unlawfully threatens action the collector cannot take. | SLS: it may lawfully threaten foreclosure on actionable installments; threat was legally permissible. | No CAA violation — threat was lawful as to actionable installments. |
| CAA §19.16.250(21) — unlawful collection | Eng: demanding payment of time‑barred debt unlawfully attempts to collect non‑authorized sums. | SLS: time‑barred installments remain valid (though unenforceable); the demand sought principal/interest/authorized fees. | No CAA violation — complaint alleged collection of allowable amounts from a valid claim. |
| Negligence | Eng: SLS breached duty by attempting to collect amounts not legally owed. | SLS: debt remained valid; demanding payment was permissible. | Dismissed — plaintiff did not allege facts showing SLS attempted to collect amounts not owed. |
| CPA — deceptive omission | Eng: omitting that portions of the claimed debt were time‑barred created a misleading impression and could coerce repayment. | SLS: notice was accurate and foreclosure threat lawful, so no deception. | Reversed dismissal as to CPA — omission could mislead a reasonable consumer; public‑interest and causation elements adequately pleaded. |
Key Cases Cited
- Cedar W. Apartment Owners Ass'n v. Nationstar Mortg., LLC, 7 Wn. App. 2d 473 (2019) (a creditor may foreclose on actionable installments but cannot foreclose on installments made unenforceable by the six‑year limitations period)
- Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27 (2009) (CPA deception standard: act, omission, or practice likely to mislead a reasonable consumer)
- Klem v. Wash. Mut. Bank, 176 Wn.2d 771 (2013) (elements of a prima facie CPA claim)
- Trujillo v. Nw. Tr. Servs., Inc., 183 Wn.2d 820 (2015) (standards for reviewing pleadings on appeal)
- Walcker v. Benson & McLaughlin, P.S., 79 Wn. App. 739 (1995) (statute of limitations may be asserted as a defense in judicial and nonjudicial foreclosures)