Jodi Lynn Scanlon v. Gcat 2014-4 Mortgage Electronic Systems ( 2018 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
JODI LYNN SCANLON,
No. 76120-0-1
Appellant,
DIVISION ONE
V.
GCAT 2014-4, LLC, UNPUBLISHED OPINION
Respondent, FILED: March 12, 2018
and
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS INC.,
Defendant.
BECKER, J. — Jodi Lynn Scanlon filed this action against a deed of trust
beneficiary, alleging claims involving wrongful foreclosure, breach of contract,
conspiracy, tortious interference with a contractual relationship, slander of title, and
violations of the Consumer Protection Act(CPA), chapter 19.86 RCW. Because
Scanlon cannot prove any set of facts that would entitle her to relief, the trial court
properly dismissed her claims under CR 12(b)(6). We affirm.
In 2006, Scanlon became the owner of real property located on Vashon
Island. On October 23, 2007, Scanlon executed a promissory note for $368,231 in
No. 76120-0-1/2
favor of Premium Capitol Funds LLC d/b/a Topdot Mortgage. To secure the
obligation, Scanlon executed a deed of trust encumbering the Vashon property.
After Scanlon allegedly defaulted on payments, notices of a trustee's sale
were recorded in 2008 and 2010. Both notices were later discontinued. At the time
the trial court dismissed Scanlon's claims in this case on October 7, 2016, the record
contained no further trustee's sale notices or any indication that the property had
been sold.
After Scanlon executed the deed of trust, the beneficial interest under the
deed of trust was assigned to a series of entities: BAG Home Loans Servicing LP
f/k/a Countrywide Home Loans Servicing LP (2010), Bank of America N.A.(2011),
and the Secretary of Housing and Urban Development(2015).
On May 22, 2015, the beneficial interest was assigned to respondent GCAT
2014-4 LLC. On September 23, 2015, the beneficial interest was assigned to
Wilmington Savings Fund Society FSB, doing business as Christiana Trust, not in its
individual capacity but solely as trustee for BCAT 2014-4TT.I Consequently, GCAT
'Wilmington Savings Fund Society, the current beneficiary, apparently
commenced nonjudicial foreclosure proceedings in June 2017. On September 28,
2017, Scanlon filed an emergency motion under the appeal cause number to stay or
cancel the trustee's sale scheduled for October 12, 2017. On October 5, 2017, a
commissioner denied the motion, noting that Wilmington was not a party to ScanIon's
appeal and that GCAT did not initiate the foreclosure proceedings or have any
interest under the deed of trust. Scanlon did not move to modify the commissioner's
ruling.
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No. 76120-0-1/3
was the beneficiary of record under Scanlon's deed of trust from May 22, 2015, to
September 23, 2015.
On May 15, 2015, Scanlon sued Bank of America in King County Superior
Court, alleging breach of contract, conspiracy to defraud, breach of implied covenant
of good faith and fair dealing, tortious interference with contract, wrongful foreclosure,
and violations of the CPA. Bank of America removed the action to federal court,
which granted Bank of America's motion to dismiss on December 23, 2015.
On December 29, 2015, Scanlon filed this action against GCAT, alleging
essentially the same claims that she raised against Bank of America. In her
complaint, Scanlon alleged that her claims rested on various wrongful acts of GCAT's
"purported predecessor in interest,"2 including acceleration of the debt and
commencement of nonjudical foreclosure "without providing sufficient notice and
opportunity to cure," failing to recognize in a timely manner Scanlon's payment of
$50,000 curing the loan default, making false statements about ownership interest
and standing to pursue the foreclosure, generating and filing documents in support of
foreclosure, including fraudulent appointments of successor trustees, sending
foreclosure documents to the wrong address, publishing the foreclosure notice in the
wrong town, and making false statements in court. Scanlon claimed that as a result
2 Clerk's Papers at 5.
3 Clerk's Papers at 11.
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No. 76120-0-1/4
of these wrongful acts, she suffered severe emotional distress and trauma, pain and
suffering, and monetary damages.
GCAT moved to dismiss Scanlon's claims under CR 12(b)( ). On October 7,
2016, after hearing the parties' arguments, the court granted the motion and
dismissed Scanlon's claims.
Scanlon appeals.
CR 12(b)(6) Failure To State a Claim
Dismissal under CR 12(b)(6)for failure to state a claim is appropriate only if it
"appears beyond doubt" that the plaintiff cannot prove any set of facts that would
justify recovery. Burton v. Lehman, 153 Wash. 2d 416, 422, 103 P.3d 1230 (2005),
quoting Tenore v. AT&T Wireless Servs., 136 Wash. 2d 322, 330, 962 P.2d 104 (1998).
We accept all facts alleged in the complaint as true and "may consider hypothetical
facts not included in the record." Burton, 153 Wash. 2d at 422, quoting Tenore 136
Wash. 2d at 330. But we need not accept the plaintiff's legal conclusions as correct.
See Haberman v. Wash. Pub. Power Supply Sys., 109 Wash. 2d 107, 120, 744 P.2d
1032, 750 P.2d 254 (1987), appeal dismissed, 488 U.S. 805, 109 S. Ct. 35, 102 L.
Ed. 2d 15 (1988). "If a plaintiffs claim remains legally insufficient even under his or
her proffered hypothetical facts, dismissal pursuant to CR 12(b)(6) is appropriate."
Gorman v. Garlock, Inc., 155 Wash. 2d 198, 215, 118 P.3d 311 (2005). We review CR
12(b)(6) dismissals de novo. FutureSelect Portfolio Mqmt., Inc. v. Tremont Grp.
Holdings, Inc., 180 Wash. 2d 954, 962, 331 P.3d 29(2014).
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No. 76120-0-1/5
Failure To Register
Relying on RCW 23.95.505, Scanlon repeatedly asserts that GCAT may not
commence foreclosure proceedings or collect any payments because it was not
registered to do business in Washington. See RCW 23.95.505(1)(foreign entity may
not do business in Washington until it registers with the secretary of state). Scanlon
maintains that as a result of its failure to register, GCAT "is barred from defending the
suit and must pay back taxes for the time in which this LLC did business within a
state without being foreign qualified here." Scanlon also maintains that the trial court
should have entered a default in her favor. These contentions fail for several
reasons.
Scanlon makes no showing that GCAT's activities as a beneficiary under the
deed of trust constituted doing business within the meaning of RCW 23.95.505.
RCW 23.95.520 expressly excludes from the definition of "doing business" in the
state "creating or acquiring indebtedness, mortgages, or security interests in
property" and "securing or collecting debts or enforcing mortgages or security
interests in property securing the debts." RCW 23.95.520(1)(g),(h). Moreover,
although Scanlon quotes RCW 23.95.505 in its entirety, she fails to address all of the
relevant provisions. See RCW 23.95.505(6)(c)(failure of a foreign entity to register
does not "preclude the foreign entity from defending an action in this state"). Nor has
Scanlon cited any authority suggesting that GCAT's failure to register has any effect
4 Br. of Appellant at 26.
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No. 76120-0-1/6
on the specific claims in this action. See Saunders v. Lloyd's of London, 113 Wash. 2d
330, 345, 779 P.2d 249(1989)(appellate court will generally decline to consider
issues unsupported by cogent legal argument and citation to relevant authority).
Breach of Contract
In order to maintain a claim for breach of contract, the plaintiff must establish
the existence of a valid and enforceable contract, the rights of the plaintiff and the
obligations of the defendant under the contract, breach, and damages. Citoli v. City
of Seattle 115 Wash. App. 459, 476, 61 P.3d 1165 (2002), review denied, 149 Wn.2d
1033(2003).
In her complaint, Scanlon identified the actions constituting breach of contract
as wrongful acceleration of the debt, wrongful filing of a foreclosure action despite
payment that cured the default, false statements in support of foreclosure, creation
and filing of false documents in support of the foreclosure, wrongful denial of a loan
modification, sending foreclosure documents to the wrong address, publishing notice
of the trustee's sale in the wrong city, and making false statements in court.
All of these actions, however, as Scanlon acknowledges, involved the alleged
wrongful foreclosure attempts by GCAT's "predecessor"5 and occurred before GOAT
became a beneficiary. Scanlon fails to identify how these actions constitute breach
of contract by subsequent beneficiaries. GOAT undertook no foreclosure actions
during the four months that it was the beneficiary. Scanlon's allegations of GCAT's
5 Clerk's Papers at 14.
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No. 76120-0-1/7
fraudulent conduct are nothing more than legal conclusions that are insufficient to
defeat a CR 12(b)(6) motion. See Haberman, 109 Wash. 2d at 120.
Scanlon's complaint alleges no conceivable facts supporting a breach of
contract claim against GCAT.
Conspiracy To Defraud
To establish a claim for civil conspiracy, Scanlon must prove "by clear, cogent,
and convincing evidence that(1)two or more people combined to accomplish an
unlawful purpose, or combined to accomplish a lawful purpose by unlawful means;
and (2) the conspirators entered into an agreement to accomplish the conspiracy."
All Star Gas, Inc. v. Bechard, 100 Wash. App. 732, 740, 998 P.2d 367(2000). A "mere
suspicion or commonality of interests is insufficient to prove a conspiracy." Wilson v.
State, 84 Wash. App. 332, 351, 929 P.2d 448(1996), review denied, 131 Wash. 2d 1022
(1997), cert. denied, 522 U.S. 949(1997).
Scanlon alleges that GCAT conspired with Wilmington Savings Fund Society,
the subsequent beneficiary, to commit "the wrongful and forcible sale of the Plaintiff's
home after collecting all arrearages."6 But the acts alleged to support the conspiracy
are the same as those supporting the breach of contract claim. Those acts all
occurred before GCAT or Wilmington Savings Fund Society had any involvement
with Scanlon. The complaint alleges no set of facts suggesting that GCAT was
involved in the alleged conspiracy.
6 Br. of Appellant at 29.
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No. 76120-0-1/8
Breach of Implied Covenant of Good Faith and Fair Dealing
Every contract contains an implied duty of good faith and fair dealing that
"obligates the parties to cooperate with each other so that each may obtain the full
benefit of performance." Badgett v. Sec. State Bank, 116 Wash. 2d 563, 569, 807 P.2d
356 (1991). But this duty does not inject substantive terms into a contract; rather, "it
requires only that the parties perform in good faith the obligations imposed by their
agreement." Badqett, 116 Wash. 2d at 569. There is no "free-floating duty of good faith
unattached to the underlying legal document." Badqett, 116 Wash. 2d at 570.
Consequently, if no contractual duty exists, "there is nothing that must be performed
in good faith." Donald B. Murphy Contractors, Inc. v. King County, 112 Wash. App.
192, 197,49 P.3d 912(2002).
In support of this claim, Scanlon once again relies on the acts of wrongful
foreclosure that occurred before any relationship with GCAT arose. Consequently,
the complaint fails to allege facts suggesting that GCAT breached any duty during the
period of its contractual relationship with Scanlon.
Tortious Interference With a Contractual Relationship
The nature of this claim is unclear. In conjunction with the tortious interference
claim, the complaint alleges that "no contract existed." But Scanlon does not allege
GCAT interfered with a valid contractual relationship that she had with another. See
Pac. Nw. Shooting Park Ass'n v. City of Sequim, 158 Wash. 2d 342, 351, 144 P.3d 276
7 Clerk's Papers at 17.
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No. 76120-0-1/9
(2006)(elements of tortious interference include intentional interference causing a
breach or termination of a valid contractual relationship). The trial court properly
dismissed the tortious interference claim under CR 12(b)(6).
Slander of Title
To prevail on a slander of title claim, Scanlon must show: "(1)false words;(2)
maliciously published;(3) with reference to some pending sale or purchase of
property;(4) which go to defeat plaintiffs title; and (5) result in plaintiffs pecuniary
loss." Rorvig v. Douglas, 123 Wash. 2d 854, 859, 873 P.2d 492(1994).
Scanlon's claim rests primarily on allegations that Bank of America executed
and recorded various fraudulent documents in conjunction with its wrongful
foreclosure action. But GCAT had no involvement with those documents. Nor does
the complaint allege that GCAT published false and malicious statements referencing
a sale of the property in its recorded assignment of the deed of trust. Under these
circumstances, Scanlon cannot prove any set of facts, consistent with her complaint,
that would entitle her to relief on her slander of title claim.
Unfair and Deceptive Trade Practices
To maintain a claim under the CPA, the plaintiff must prove (1) an unfair or
deceptive act or practice,(2) occurring in trade or commerce,(3) affecting the public
interest,(4) injury to a person's business or property, and (5) causation. Hangman
Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash. 2d 778, 784, 719 P.2d
531 (1986). A statutory violation may establish a per se CPA violation. Anderson v.
Valley Quality Homes, Inc., 84 Wash. App. 511, 515-16, 928 P.2d 1143, review denied,
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No. 76120-0-1/10
132 Wn.2d 1002(1997).
Scanlon's complaint alleges that GCAT "engaged in various deceptive and
unfair trade practices,"8 but does not otherwise identify any specific unfair or
deceptive acts that GCAT committed. Rather, the complaint repeats yet again the
alleged wrongful foreclosure attempts occurring years before GCAT became the
beneficiary.
Scanlon's discussion of the Mortgage Electronic Registration System Inc.
(MERS)in Bain v. Metro. Mortq. Grp, Inc., 175 Wash. 2d 83, 285 P.3d 34(2012), is
misplaced. In Bain, our Supreme Court held that "only the actual holder of the
promissory note or other instrument evidencing the obligation may be a beneficiary
with the power to appoint a trustee to proceed with a nonjudicial foreclosure on real
property." Bain, 175 Wash. 2d at 89. Consequently, MERS is an ineligible beneficiary
within the terms of the Washington deeds of trust act, chapter 61.24 RCW,"if it never
held the promissory note or other debt instrument secured by the deed of trust."
Bain, 175 Wash. 2d at 110. Although characterizing MERS as the beneficiary has the
"capacity to deceive" for purposes of a CPA action, it is not per se deceptive. Bain,
175 Wash. 2d at 117.
MERS is not a party on appeal. Nor did GCAT undertake any actions to
foreclose while it was the beneficiary. The trial court properly dismissed Scanlon's
CPA claim.
8 Clerk's Papers at 22.
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No. 76120-0-1/11
Motion To Amend
In her response to GCAT's motion to dismiss, Scanlon asked for leave to
amend her complaint "if the court finds any allegation to be missing in the
complaint."' Scanlon made what appears to be a similar request at the conclusion of
her oral argument on the motion to dismiss. The trial court did not respond or rule on
the request. On appeal, Scanlon contends the court erred in failing to permit her to
amend the complaint.
Scanlon did not attempt to file an amended complaint. Nor did she present
any supporting legal argument or object to the trial court's failure to respond.
Moreover, Scanlon's vague requests were essentially an invitation to the court to
assist her in amending her pleadings. Scanlon fails to demonstrate that the court
committed any error or abused its discretion in failing to respond.
Scanlon raises several new allegations and arguments in her reply brief. We
decline to consider them. See Cowiche Canyon Conservancy v. Bosley, 118 Wash. 2d
801, 809, 828 P.2d 549(1992)(appellate court will not consider issues and
arguments raised for the first time in a reply brief).
9 Clerk's Papers at 238.
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FILED
COURT OF APPEALS OW I
STATE OF WASHINGTON
2018 MAR 12 AM 8: 20
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