Lyons v. U.S. Bank National AssociationLyons v. U.S. Bank National Association
- Reporters:
- ,
- Before:
- Fairhurst, Madsen, Wiggins, González, Owens, Gordon McCloud, Stephens (en banc)
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
In August 2007, Winnie Lyons signed a promissory note secured by a deed of trust encumbering real property in Burien, Washington. The Burien property is Lyons’ primary residence and also the location from which she operates an adult family home (AFH),1 her sole source of income. Wells Fargo Bank NA was identified on the deed of trust as the lender and beneficiary. Northwest Trustee Services LLC was identified as the trustee. The deed of trust was recorded on August 31, 2007 in King County. In early 2009, Northwest Trustee Services LLC became
In October 2009, an employee of Wells Fargo executed a beneficiary declaration identifying Wells Fargo as trustee for Soundview Home Loan Trust 2006. This beneficiary declaration asserted, “Wells Fargo Bank, NA, as Trustee for Soundview Home Loan Trust 2006-WFI is the actual holder of the promissory note or other obligation evidencing the above-referenced loan or has requisite authority under
In October 2011, Lyons filed bankruptcy, and in January 2012 she applied for a loan modification with Wells Fargo. On March 30, 2012, while Lyons was waiting for a response regarding her application for a modification, she received a notice of trustee‘s sale from NWTS informing her that her property was scheduled to be sold on July 6, 2012. On April 5, 2012, Wells Fargo told Lyons’ attorney that the in-house modification had been approved. On April 19, 2012, Lyons received the letter confirming the modification. The terms required her to pay $10,000 by May 1, 2012.
However, on March 29, 2012, Wells Fargo had sold Lyons’ loan to U.S. Bank National Association as trustee for Stanwich Mortgage Loan Trust Series 2012-3 with Carrington Mortgage Services LLC as the new servicer of the loan. This was to become effective on May 1, 2012. NWTS received notice of the sale and service release on April 12, 2012. Lyons received notice of this sale on April 26, 2012.
On April 26, 2012, Lyons’ attorney spoke with a representative of NWTS to inform it that Wells Fargo no longer had any beneficial interest in the loan after the sale, that Carrington was the new servicer of the loan, and that Lyons had received a loan modification so she was no longer in default. On June 11, 2012, Lyons’ attorney again called NWTS to inform them of the loan modification and the sale of the loan. A NWTS employee informed her that Carrington had directed NWTS to continue with the foreclosure sale as scheduled. On June 14, 2012, Lyons’ attorney called Carrington and an employee indicated that Carrington did not show the property in foreclosure status. Another employee further indicated that Carrington had not told NWTS to go forward with the sale. Lyons’ attorney then sent a cease and desist letter to NWTS and Carrington.
On June 18, 2012, Lyons’ attorney followed up with NWTS. NWTS acknowledged receipt and informed her the sale was still on but that the matter had
Lyons alleges that this situation has had serious emotional and economic impacts on her. In March 2012, Lyons arrived home to be handed the notice of trustee‘s sale by a family member of one of her full pay AFH clients. In addition to the sense of humiliation Lyons felt, this client moved out approximately two weeks later because of concern that Lyons was going to lose her business and her home. Before leaving, this client shared her belief that the home was going to be foreclosed on with other AFH clients, some of whom also moved shortly thereafter. The AFH business is her primary source of income, and the loss of clients directly impacted her financially. In her declaration, Lyons asserts that thereafter she struggled with day-to-day tasks and felt hopeless. She began counseling with the pastor of her church. Her pastor said that previously Lyons was a very positive woman with a drive to succeed, but since the pending foreclosure she was fearful and depressed.
NWTS moved for summary judgment. After argument, the court granted the motion for summary judgment as to all claims against NWTS. Subsequently, Lyons and the remaining defendants (Stanwich, Carrington, and Wells Fargo) entered a stipulated order of dismissal. Lyons’ motion for reconsideration of the order of summary judgment was denied. We granted Lyons’ petition for direct review.
II. ISSUES PRESENTED
1. If a nonjudicial foreclosure sale does not happen, can a plaintiff bring a claim for damages under the DTA or the CPA?
2. Was the grant of summary judgment against Lyons on her CPA claim improper?
3. Was the grant of summary judgment against Lyons on her intentional infliction of emotional distress claim improper?
III. ANALYSIS
Lyons alleges a range of errors by the trial court that resulted from it granting summary judgment in favor of NWTS. We review questions of law and summary judgment rulings de novo. Dreiling v. Jain, 151 Wn.2d 900, 908, 93 P.3d 861 (2004); Reid v. Pierce County, 136 Wn.2d 195, 201, 961 P.2d 333 (1998). “In reviewing an order of summary judgment, we engage in the same inquiry as a trial court.” Reid, 136 Wn.2d at 201. We interpret all the facts and inferences therefrom in favor of
Lyons alleges three causes of action against NWTS—one under the DTA, one under the CPA, and one for intentional infliction of emotional distress. All of these claims are supported by the same underlying conduct that Lyons alleges involves a violation of
A. Without a nonjudicial foreclosure sale, a party may not bring a claim for damages under the DTA, but they can bring a claim under the CPA
Recently we decided Frias v. Asset Foreclosure Services, Inc., ___ Wn.2d ___, 334 P.3d 529 (2014). Frias involved two certified questions from the federal district court regarding whether a plaintiff could bring a claim for damages under
We hold that the DTA does not create an independent cause of action for monetary damages based on alleged violations of its provisions where no foreclosure sale has been completed. . . . We further hold that under appropriate factual circumstances, DTA violations may be actionable under the CPA, even where no foreclosure sale has been completed . . . . [T]he same principles that govern CPA claims generally apply to CPA claims based on alleged DTA violations.
334 P.3d at 531. Without the sale of the property, damages are not recoverable under the DTA, but a CPA claim may be maintained regardless of the status of the property. Frias clearly resolves the first issue in this case. Lyons cannot bring a claim for damages under the DTA in the absence of a sale, but she may bring a claim for similar actions under the CPA.
B. There were material issues of fact for trial regarding whether NWTS violated provisions of the DTA, which could be used to support Lyons’ CPA claim, so granting summary judgment to NWTS on Lyons’ CPA claim was improper
A CPA claim is a preexisting statutory cause of action with established elements. Id. at 537. A claim under the CPA based on violations of the DTA must meet the same requirements applicable to any other CPA claim.3 The availability of
The main question raised by the parties surrounds whether the alleged actions of NWTS amount to unfair or deceptive practices under the CPA.4 The allegedly
CPA jurisprudence is well settled, and determining what an unfair act is can be done by looking to precedent. The DTA sets up a three party system for mortgages where an independent trustee acts as the impartial party between a lender and a borrower instead of the court. Klem, 176 Wn.2d at 790. If Lyons’ alleged violations are true, NWTS’ actions would likely be considered unfair acts, but questions of fact remain as to whether NWTS’ actions amounted to such violations. These material
1. There were material issues of fact regarding whether NWTS did not act in good faith
Lyons says that NWTS violated its duty to act in good faith by failing to act impartially toward her. Lyons points to various indicators that she believes demonstrates NWTS’ lack of good faith:
(1) NWTS knew that Ms. Lyons had filed bankruptcy in 2011 (2) NWTS knew that Ms. Lyons had engaged in a review for a loan modification (3) In the bankruptcy [matter], NWTS, sister company, RCO represented Wells Fargo‘s interest (4) Lyons’ counsel on numerous occasions contacted NWTS to discuss either the loan modification or the fact Wells Fargo no longer had any beneficial interest (5) NWTS knew that Wells Fargo requested a service release and that NWTS needed to provide Wells Fargo with an invoice or NWTS would not be paid (6) NWTS provided Wells Fargo with that invoice on or about April 2012 (7) NWTS changed the scheduled foreclosure sale loan number when it knew about the service release to Carrington (8) NWTS, Nanci Lambert, indicated that Carrington instructed NWTS to continue with the scheduled foreclosure sale (9) Before a lawsuit was filed, several telephonic phone conversations took place (10) On or about June 14, 2012, NWTS received a cease and desist letter, coupled with proof of the loan modification.
Opening Br. of Lyons at 34-35 (footnotes omitted). Put simply, Lyons claims NWTS deferred to the course of action that Wells Fargo had previously initiated without giving any credence to what she, the borrower, was telling it about a change in the situation between the parties.
We find that Lyons has presented material issues of fact. The conflict over the actual beneficiary was brought to the attention of NWTS on April 26, 2012, but there is no evidence in the record that anyone at NWTS investigated this conflict until
2. There were material issues of fact regarding whether the beneficiary declaration was proper and whether NWTS could rely on it
Lyons alleges multiple issues with the beneficiary declaration. Because of these issues, Lyons claims NWTS did not have proper proof that Wells Fargo was the owner of the note and could direct NWTS to foreclose. Thus, Lyons alleges that NWTS violated
Lyons claims that the second beneficiary declaration was defective because the language did not prove Wells Fargo, the beneficiary, was the owner, as required by
Although ownership can be proved in different ways, the statute itself suggests one way: “A declaration by the beneficiary made under the penalty of perjury stating that the beneficiary is the actual holder of the promissory note . . . shall be sufficient proof as required under this subsection.”
The United States District Court for the Western District of Washington recently decided Beaton v. JPMorgan Chase Bank N.A., No. C11-0872 RAJ, 2013 WL 1282225 (Mar. 26, 2013) (court order), where it interpreted a beneficiary declaration similar to the declaration in this case. It read, “‘JPMorgan Chase Bank, N.A. successor in interest to Washington Mutual Bank fka Washington Mutual Bank, FA is the actual holder of the promissory note or other obligation evidencing the above-referenced loan or has requisite authority under
Because DTA provisions should be strictly construed, we find, consistent with Beaton, that the declaration at issue here does not comply with
C. No issues of fact remain for the claim of intentional infliction of emotional distress, so summary judgment was proper
Lyons also alleges a claim for the tort of outrage, otherwise known as intentional infliction of emotional distress. “The tort of outrage requires the proof of three elements: (1) extreme and outrageous conduct, (2) intentional or reckless infliction of emotional distress, and (3) actual result to plaintiff of severe emotional distress.” Kloepfel v. Bokor, 149 Wn.2d 192, 195, 66 P.3d 630 (2003). “The question of whether certain conduct is sufficiently outrageous is ordinarily for the jury, but it is initially for the court to determine if reasonable minds could differ on whether the conduct was sufficiently extreme to result in liability.” Dicomes v. State, 113 Wn.2d 612, 630, 782 P.2d 1002 (1989); see Robel v. Roundup Corp., 148 Wn.2d 35, 51, 59 P.3d 611 (2002). “The first element requires proof that the conduct was ‘so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.‘” Robel, 148 Wn.2d at 51 (emphasis omitted) (internal quotation marks omitted) (quoting Dicomes, 113 Wn.2d at 630).
Conduct during foreclosure could support a claim for intentional infliction of emotional distress, but it must satisfy the high burden applicable to these claims. RESTATEMENT (SECOND) OF TORTS § 46, cmt. d (1965); compare Montgomery v. SOMA Fin. Corp., No. C13-360 RAJ, 2014 WL 2048183, at *7 (W.D. Wash. May 19, 2014) (court order) (plaintiffs alleged that the bank induced them to default, then foreclosed on the property using a perjured declaration; the court found that reasonable minds could differ as to whether this egregious conduct was sufficiently outrageous and so the claim survived summary judgment), with Vawter, 707 F. Supp. 2d at 1128 (“Chase‘s and MERS‘s actions in connection with the nonjudicial foreclosure process, as alleged by the Vawters, may be problematic, troubling, or even deplorable” but is insufficiently outrageous for an intentional infliction of emotional distress claim), and McGinley v. Am. Home Mortg. Serv., Inc., No. 2:10-CV-01157 RJB, 2010 WL 4065826, at *11 (W.D. Wash. Oct. 15, 2010) (court order) (claim resting on alleged nondisclosures associated with loan refinance, terms of the loan, and subsequent nonjudicial foreclosure proceedings was insufficiently
To support her claim for intentional infliction of emotional distress, Lyons relies on the same factual allegations above. She claims that the conduct of NWTS in not confirming the proper beneficiary and in not suspending the trustee‘s sale when she contacted them was so outrageous as to go beyond all bounds of decency. But these allegations are not so outrageous that they shock the conscience or go beyond all sense of decency. While perhaps the actions might have violated the DTA and could support a claim under the CPA, the acts are not sufficiently outrageous to support a claim for outrage. We affirm the trial court‘s grant of summary judgment on the intentional infliction of emotional distress claim.
IV. CONCLUSION
If a trustee‘s sale has not occurred, an allegedly wronged homeowner cannot bring a damages claim under the DTA. However even if a trustee‘s sale has not occurred, an allegedly wronged homeowner can bring a claim for damages under the CPA. Material issues of fact remain as to whether NWTS violated the CPA by not acting in good faith or by improperly relying on a questionable beneficiary
Fairhurst, J.
WE CONCUR:
Madsen, C. J.
Wiggins, J.
C. Johnson, J.
González, J.
Owens, J.
Gordon McCloud, J.
Stephens, J.
Yu, J.