Nancy Bess v. Ocwen Loan Servicing LLC ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 9 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NANCY BESS, individually, and as No. 15-35550
Personal Representative of the Estate of
Gary Ray Bess, deceased, and on behalf of D.C. No. 3:15-cv-05020-BHS
others similarly situated,
Plaintiff-Appellant, MEMORANDUM*
v.
OCWEN LOAN SERVICING, LLC, a
Delaware limited liability company,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Washington
Benjamin H. Settle, District Judge, Presiding
Argued and Submitted February 7, 2018
Seattle, Washington
Before: M. SMITH and MURGUIA, Circuit Judges, and ROBRENO,** District
Judge.
The present case arises out of the allegedly unlawful entry by Ocwen Loan
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Eduardo C. Robreno, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.
Servicing (“Ocwen”) onto the property of Nancy Bess. After Bess defaulted on her
mortgage loan, but prior to foreclosure, Ocwen entered Bess’s property for the
purpose of carrying out property preservation measures, including changing the
locks and removing Bess’s personal belongings. Bess appeals the district court’s
dismissal of Bess’s first amended complaint pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure. We have jurisdiction pursuant to 28 U.S.C.
§ 1291. We affirm in part, reverse in part, and remand for further proceedings.
1. The parties concede that following the Washington Supreme Court’s
decision in Jordan v. Nationstar Mortgage, LLC, 374 P.3d 1195 (Wash. 2016),
Ocwen no longer may rely on the entry provisions in the parties’ deed of trust to
argue that its entry onto Bess’s property was privileged. Because the “privileged
entry” defense is no longer valid, we agree that Bess’s common law trespass claim
was well-pleaded and that remand is appropriate on that claim.
2. Reviewing de novo and in light of Jordan, we conclude that Bess’s claim
for intentional trespass under Revised Code of Washington section 4.24.630 also
was well-pleaded. To state a claim for intentional trespass, a plaintiff must allege
“(1) an invasion of property affecting an interest in exclusive possession, (2) an
intentional act, (3) reasonable foreseeability that the act would disturb the
plaintiff’s possessory interest, and (4) actual and substantial damages.” Grundy v.
Brack Family Tr., 213 P.3d 619, 624 (Wash. Ct. App. 2009) (quoting Wallace v.
2
Lewis County, 137 P.3d 101 (Wash. Ct. App. 2006)). In her first amended
complaint, Bess alleges that Ocwen or its agents forcibly entered the Bess
residence, installed new locks and placed a lock-box upon the residence, removed
her personal property and belongings, and caused waste and injury to the property.
Bess alleges that these actions occurred before Bess had vacated the residence and
prior to non-judicial foreclosure. These allegations are sufficient to show a
reasonably foreseeable invasion of Bess’s property, which would affect Bess’s
exclusive possession and interest in the property. See id. With regards to the
second element, we reject Ocwen’s argument that Bess failed to plead
wrongfulness, which is required to show an intentional act under Washington law.
See Wash. Rev. Code § 4.24.630(1) (“[A] person acts ‘wrongfully’ if the person
intentionally and unreasonably commits the act or acts while knowing, or having
reason to know, that he or she lacks authorization to so act.”); Clipse v. Michels
Pipeline Const., Inc., 225 P.3d 492, 494–95 (Wash. Ct. App. 2010)
(“[W]rongfulness cannot refer to the mere act of entry upon the land,” but rather
requires “intentional conduct.”). Bess alleged that Ocwen acted pursuant to the
entry provisions contained in the deed of trust, which were unlawful at the time the
entry occurred. See Wash. Rev. Code § 7.28.230 (“A mortgage of any interest in
real property shall not be deemed a conveyance so as to enable the owner of the
mortgage to recover possession of the real property, without a foreclosure and sale
3
according to law . . . .”); Jordan, 374 P.3d at 1201–02. Based on these allegations
it is plausible that Ocwen was aware that its conduct was unlawful, which, at this
stage in the litigation, is sufficient to permit Bess’s claim for statutory trespass to
go forward. See Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009) (complaint must
state plausible claim for relief).
3. We also conclude that Ocwen’s alleged conduct, including the property
preservation measures that occurred prior to foreclosure, could constitute unfair or
deceptive acts in violation of Washington’s Consumer Protection Act (CPA). To
prevail on a CPA claim, a plaintiff must prove the following elements: (1) an
unfair or deceptive act or practice; (2) the act or practice occurred in trade or
commerce; (3) the act or practice impacts the public interest; (4) the act or practice
caused injury to the plaintiff in his business or property; and (5) the injury is
causally linked to the unfair or deceptive act. Hangman Ridge Training Stables,
Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 535 (Wash. 1986). By alleging Ocwen
entered Bess’s property pursuant to the unlawful entry provisions in the parties’
deed of trust, Bess has plausibly alleged an unfair or deceptive practice that has the
potential to deceive a substantial portion of the public. See Panag v. Farmers Ins.
Co. of Washington, 204 P.3d 885, 894 (2009) (“The language in the collection
notices has the capacity to deceive a substantial portion of the public because they
are representative of other notices sent to thousands of Washington citizens.”). In
4
addition, Ocwen’s conduct was common to the purported class and was carried out
pursuant to what appears to be form language in the deed of trust. Ocwen’s
conduct therefore had the capacity to affect the public interest. See Holiday Resort
Cmty. Ass’n v. Echo Lake Assocs., LLC, 135 P.3d 499, 507 (Wash. Ct. App. 2006).
Finally, by alleging that she lost possession and full use and enjoyment of her
property as a result of Ocwen changing the locks, Bess has established that Ocwen
caused injury to Bess. See Howard v. Edgren, 385 P.2d 41, 41 (Wash. 1963) (loss
of possession of a property entitles the owner to reasonable rents).
4. In light of the supplemental briefing and Bess’s concession to dismissal
at oral argument, we affirm the dismissal of the remaining claims in Bess’s first
amended complaint.
5. Finally, the district court did not err in its conclusion that Bess lacked
standing to bring claims on behalf of her late husband’s estate. Bess alleged the
property was acquired by Gary Bess before his marriage to Nancy Bess, and that
after their marriage Gary Bess died intestate. When considered in light of
Washington law, these facts do not show that the estate had any interest in the
property. The district court correctly concluded that at the time of Ocwen’s entry
and property preservation activities, the estate did not own the property because
Gary’s “net separate estate,” including his interest in the property, had vested in
Bess under Washington law. See Wash. Rev. Code §§ 11.04.015(1)(d), 11.04.250.
5
As it was Bess’s burden to allege facts to support standing, Wash. Envt’l Council v.
Bellon, 732 F.3d 1131, 1139 (9th Cir. 2013), the district court’s dismissal of the
claims on behalf of Gary Bess’s estate for lack of standing was not in error.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Each party shall bear its own costs on appeal.
6