U.s. Bank, N.a. v. Jason Hagen ( 2019 )


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  •                                                                                          Filed
    Washington State
    Court of Appeals
    Division Two
    November 5, 2019
    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
    DIVISION II
    U.S. BANK TRUST, N.A. as trustee for LSF8                        No. 51556-3-II
    MASTER PARTICIPATION TRUST,
    Respondent,
    v.
    JACK BAILEY, an individual; SHARON J.                      UNPUBLISHED OPINION
    BAILEY, an individual; JASON HAGEN, an
    individual; HOUSEHOLD FINANCE
    CORPORATION III, a Washington
    corporation; MOUNT VISTA ASSOCIATION
    AKA MOUNT VISTA HOMEOWNERS
    ASSOCIATION, a Washington corporation;
    Clark Regional Wastewater District, a Special
    Purpose District and Public Agency, and all
    other person or parties unknown claiming any
    legal or equitable right, title, estate, lien, or
    interest in the real property described in the
    complaint herein, adverse to Plaintiff’s title, or
    any cloud on Plaintiff’s title to the Property,
    Appellant.
    LEE, A.C.J. — Jason Hagen appeals the superior court’s order granting U.S. Bank’s Civil
    Rule (CR) 12(c) motion for judgment on the pleadings, denying Hagen’s motion for summary
    judgment, and dismissing his counterclaim to quiet title. We affirm.
    No. 51556-3-II
    FACTS
    On July 11, 2002, Jack and Sharon Bailey obtained a loan for $291,102.72. The loan was
    secured by a deed of trust for property located in Clark County (the property). The Deed of Trust
    required that notice of default be provided prior to acceleration. And the Deed of Trust provided
    that if a breach is not cured, “Lender, at Lender’s option, may declare all of the sums secured by
    this Deed of Trust to be immediately due and payable without further demand and may invoke the
    power of sale and any other remedies permitted by applicable law.” Clerk’s Papers (CP) at 218.
    The Baileys stopped making payments on the loan in August 2008.
    On May 15, 2009, the Baileys received a notice of default for a total of $40,906.86. The
    notice of default stated,
    If the default(s) described above is (are) not cured within thirty days of the mailing
    of this notice, the lender hereby gives notice that the entire principal balance owing
    on the note secured by the Deed of Trust described in paragraph 1 above, and all
    accrued and unpaid interest, as well as costs of foreclosure, shall immediately
    become due and payable. Notwithstanding acceleration, the grantor or the holder
    of any junior lien or encumbrance shall have the right after acceleration to reinstate
    by curing all defaults and paying all costs, fees and advances, if any, made pursuant
    to the terms of the obligation and/or deed of trust on or before 11 days prior to a
    Trustee’s sale.
    CP at 173. A notice required by the Fair Debt Collection Practices Act1 stated that the entire
    amount owed under the loan was $311,221.42. However, this was not noted as the amount
    currently due.
    On June 19, 2009, Regional Trustee Services recorded a notice of Trustee’s sale. The
    notice included a default amount of $46,208.58, which included delinquent payments starting
    1
    15 U.S.C. chapter 41.
    2
    No. 51556-3-II
    August 16, 2008. The notice stated that the principal amount owed under the loan, which would
    be satisfied by the trustee’s sale, was $270,336.87 plus interest, charges, and fees (that were not
    calculated in the notice).
    Between June 2011 and January 2014, the Baileys were sent several notices of the right to
    cure default.2 The June 2011 notice stated that the total amount due was $116,368.02. The January
    2014 notice stated that the total amount due was $182,659.48. None of the notices included the
    full amount due under the loan.
    On September 17, 2009, the Baileys petitioned for bankruptcy. The Baileys included the
    property in the bankruptcy, listing its value as $274,000 and disclosing a secured claim on the
    property for $338,411. The Baileys intended to surrender the property in the bankruptcy. On
    December 16, 2009, the United State Bankruptcy Court discharged the Baileys’ personal debts in
    bankruptcy.
    2
    These notices were attached as exhibits to the Declaration of Nathaniel Mansi. Hagen objected
    to Mansi’s declaration because there was not sufficient basis in the declaration to demonstrate
    Mansi had personal knowledge that the notices were mailed to the Baileys. The superior court
    declined to rule on Hagen’s objection to Mansi’s declaration and considered the declaration.
    Before this court, Hagen states that “[t]hese letters cannot be considered because there is no
    competent evidence that they were sent to the Baileys.” Br. of Appellant at 20. However, Hagen
    does not argue that the superior court erred by declining to rule on his objection and considering
    the declaration.
    We do not consider issues or assignments of error that are not supported by argument or
    citation to authority. RAP 10.3(a)(6); Bercier v. Kiga, 
    127 Wash. App. 809
    , 824, 
    103 P.3d 232
    (2004), review denied, 
    155 Wash. 2d 1015
    (2005). “Passing treatment of an issue or lack of reasoned
    argument is insufficient to merit judicial consideration.” Holland v. City of Tacoma, 
    90 Wash. App. 533
    , 538, 
    954 P.2d 290
    , review denied, 
    136 Wash. 2d 1015
    (1998). Therefore, we do address whether
    the Mansi declaration may be considered. Furthermore, regardless of the subsequent notices, we
    would reach the same conclusion based on the language of the notice of default to the Baileys.
    3
    No. 51556-3-II
    On the September 26, 2011, the Baileys executed a quit claim deed and transferred the
    property to Jason Hagen.3
    On September 22, 2015, U.S. Bank filed a complaint for foreclosure against the Baileys
    and Hagen. On January 12, 2017, Hagen filed an answer to U.S. Bank’s complaint and included
    a counterclaim to quiet title to the property.4
    On August 21, 2017, U.S. Bank filed a CR 12(c) motion for judgment on the pleadings
    seeking to dismiss Hagen’s counterclaim to quiet title. On October 18, 2017, Hagen filed a motion
    for summary judgment on his counterclaim to quiet title.
    On February 15, 2018, the superior court entered an order on the motions. The superior
    court granted U.S. Bank’s CR 12(c) motion for judgment on the pleadings. The superior court
    denied Hagen’s motion for summary judgment. And the superior court dismissed Hagen’s
    counterclaim to quiet title. The superior court also ruled that the order dismissing Hagen’s
    counterclaim to quiet title should be entered as final judgment.
    Hagen appeals.
    3
    The record before us relating to the Baileys’ bankruptcy is limited. The record shows that the
    Baileys intended to surrender the property in bankruptcy and their personal debt was discharged
    in bankruptcy. But the records provide no explanation as to how the Baileys could quit claim the
    property to Hagen a year after they supposedly surrendered the property in bankruptcy.
    4
    Hagen’s counterclaim sought to quiet title against U.S. Bank and any of its predecessors in
    interest. Hagen sought the judgment quieting title based on his claim that U.S. Bank’s foreclosure
    action was barred by the statute of limitations. See Terhune v. North Cascade Trustee Services,
    Inc, ___ Wn. App. 2d ___, 
    446 P.3d 683
    , 689 (2019) (“If the statute of limitations has expired on
    a promissory note secured by a deed of trust on real property, the owner is entitled to quiet title on
    the property.”). And Hagen did not seek to quiet title against the Bailey’s, nor does there appear
    to be a dispute between the Baileys and Hagen regarding title to the property.
    4
    No. 51556-3-II
    ANALYSIS
    Hagen argues that the superior court erred by granting the order on motions because the
    loan was accelerated in June 2009, and therefore, the statute of limitations barred U.S. Bank’s
    foreclosure action.5 Because the language in the May 2009 notice of default did not accelerate the
    loan, the statute of limitations did not bar the foreclosure. Therefore, the superior court did not err
    in entering the order on motions.
    A.     LEGAL PRINCIPLES
    We review a superior court's dismissal under CR 12(c) de novo. P.E. Sys., LLC v. CPI
    Corp., 
    176 Wash. 2d 198
    , 203, 
    289 P.3d 638
    (2012). CR 12(c) states, in relevant part, “After the
    pleadings are closed but within such time as not to delay the trial, any party may move for judgment
    on the pleadings.” Dismissal is appropriate when it appears beyond doubt that the plaintiff cannot
    prove any set of facts, consistent with the complaint, that may entitle him or her to relief. Burton
    v. Lehman, 
    153 Wash. 2d 416
    , 422, 
    103 P.3d 1230
    (2005). We presume the plaintiff's allegations are
    true, and we may consider hypothetical facts not included in the record. 
    Id. We review
    summary judgment orders de novo. Washington Federal v. Azure Chelan, LLC,
    
    195 Wash. App. 644
    , 652, 
    382 P.3d 20
    (2016). Summary judgment is appropriate if no genuine
    issues of material fact exist and the moving party is entitled to judgment as a matter of law. CR
    5
    Hagen also argues that the statute of limitations was not tolled or “extended” by initiating the
    nonjudicial foreclosure or the bankruptcy. However, because we hold that the loan was not
    accelerated we do not address tolling. Moreover, this appeal does not address the substantive
    foreclosure—it only addresses the superior court’s order dismissing Hagen’s counterclaim to quiet
    title to the property. The superior court’s order would only be erroneous if the foreclosure was
    entirely barred by the statute of limitations. Because the loan was not accelerated, the statute of
    limitations does not bar the foreclosure and the superior court properly dismissed Hagen’s
    counterclaim to quiet title.
    5
    No. 51556-3-II
    56(c). “‘A material fact is one upon which the outcome of the litigation depends.’” Washington
    
    Federal, 195 Wash. App. at 652
    (quoting Dong Wan Kim v. O’Sullivan, 
    133 Wash. App. 557
    , 559, 
    137 P.3d 61
    (2006), review denied, 
    159 Wash. 2d 1018
    (2007)). We review facts and inferences in the
    light most favorable to the non-moving party. Washington 
    Federal, 195 Wash. App. at 652
    .
    RCW 4.16.040(1) provides a six year statute of limitations for actions on promissory notes
    and deeds of trust. Westar Funding, Inc. v. Sorrels, 
    157 Wash. App. 777
    , 784-85, 
    239 P.3d 1109
    (2010). When the note is paid in installments, the six year statute of limitations runs against each
    individual installment when it is due. 4518 S. 256th, LLC v. Karen L. Gibbon, PS, 
    195 Wash. App. 423
    , 434, 
    382 P.3d 1
    (2016), review denied, 
    187 Wash. 2d 1003
    (2017). However, when a note is
    accelerated, “the entire remaining balance becomes due and the statute of limitations is triggered
    for all installments that had not previously become due.” 
    Id. at 434-35.
    “If the lender elects to
    accelerate the debt after a breach, the acceleration must be clearly and unequivocally expressed to
    the debtor.” Washington 
    Federal, 195 Wash. App. at 663
    .
    An owner of property is entitled to quiet title to the property if the statute of limitations has
    expired on a promissory note secured by a deed of trust. Cedar W. Owners Ass’n v. Nationstar
    Martg., LLC, 
    7 Wash. App. 2d
    473, 482, 
    434 P.3d 554
    , review denied, 
    193 Wash. 2d 1016
    (2019);
    RCW 7.28.300.6
    6
    RCW 7.28.300 provides,
    The record owner of real estate may maintain an action to quiet title against the lien
    of a mortgage or deed of trust on the real estate where an action to foreclose such
    mortgage or deed of trust would be barred by the statute of limitations, and, upon
    proof sufficient to satisfy the court, may have judgment quieting title against such
    a lien.
    6
    No. 51556-3-II
    B.     NO ACCELERATION OF LOAN
    Hagen argues that the language in the notice of default in May 2009 was sufficient to
    accelerate the loan. Specifically, Hagen asserts that because the Baileys failed to cure the default,
    the loan was automatically accelerated. However, we recently resolved this issue contrary to
    Hagen’s assertion.
    In Terhune v. North Cascade Trustee Services, Inc., we held that “[a] default on the loan
    alone will not accelerate a note, even if an installment note provides for automatic acceleration
    upon default.” ___ Wn. App. 2d ___, 
    446 P.3d 683
    , 689 (2019). We also held that future,
    conditional language is not sufficient to actually accelerate the loan because acceleration “‘must
    be made in a clear and unequivocal manner which effectively apprises the maker that the holder
    has exercised his right to accelerate the payment date.’” Terhune, ___ Wn. App. 2d ___, 446 P.3d
    at 688-89 (quoting Merceri v. Bank of N.Y. Mellon, 
    4 Wash. App. 2d
    755, 761, 
    434 P.3d 84
    (2018)).
    In Terhune, the lender sent the borrower a notice of default that stated that the loan “will be
    accelerated” if the default was not cured by the specified date. ___ Wn. App. 2d ___, 446 P.3d at
    689 (bold face omitted). We held that the “argument that the failure to cure automatically triggered
    acceleration is inconsistent with the rule that the lender must take some affirmative action to
    accelerate a note.” Terhune, ___ Wn. App. 2d ___, 446 P.3d at 689. This is especially true in
    cases where subsequent notices demonstrate that the lender is seeking to recover past due
    installments rather than the entire amount due. Terhune, ___ Wn. App. 2d ___, 446 P.3d at 689-
    90.
    Here, the May 2009 notice of default stated that the loan “shall immediately become due
    and payable” if the default is not cured within 30 days. CP at 173. This was a conditional
    7
    No. 51556-3-II
    provision. And just as the language “will be accelerated” is not sufficient to automatically
    accelerate the loan, the language in the May 2009 notice of default is not sufficient to automatically
    accelerate the loan. Also, the May 2009 notice of default and all subsequent notices that were sent
    to the Baileys show that only past due amounts, rather than the full amount of the outstanding loan,
    was being sought. Therefore, the superior court properly determined that the May 2009 notice of
    default did not accelerate the loan.
    Because the notice of default did not automatically accelerate the loan, the statute of
    limitations on the foreclosure did not expire. Therefore, U.S. Bank’s foreclosure action was not
    barred and Hagen was not entitled to quiet title to the property. Terhune, ___ Wn. App. 2d ___,
    446 P.3d at 689 (owner entitled to quiet title on the property if the statute of limitations has expired
    on a promissory note secured by a deed of trust on the real property). Accordingly, the superior
    court properly granted judgment in favor of U.S. Bank, denied Hagen’s motion for summary
    judgment, and dismissed Hagen’s counterclaim to quiet title. We affirm.
    Hagen also argues that the loan was automatically accelerated as a precondition of the
    nonjudicial foreclosure action. Hagen’s argument is unpersuasive.
    First, “the initiation of nonjudicial foreclosure proceedings does not automatically
    accelerate a note.” Terhune, ___ Wn. App. 2d ___, 446 P.3d at 689. Second, the language that
    Hagen relies on from the Deed of Trust does not demonstrate that the loan must be accelerated
    prior to nonjudicial foreclosure or a Trustee’s sale. The Deed of Trust states,
    Lender, at Lender’s option, may declare all of the sums secured by this Deed of
    Trust to be immediately due and payable without further demand and may invoke
    the power of sale and any other remedies permitted by applicable law.
    8
    No. 51556-3-II
    CP at 218 (emphasis added). The language “may” is permissive and does not require that the
    Lender accelerate the loan prior to initiating a sale. Therefore, Hagen’s argument that the loan
    was automatically accelerated by the Notice of Trustee’s sale also fails.
    Although we have already decided that the conditional language in the notice of default
    does not accelerate the loan, we address Hagen’s argument that judgment on the pleadings is
    inappropriate because he has presented a hypothetical set of facts that would entitle him to relief.
    Hagen’ argument conflates factual allegations with legal conclusions. Hagen is correct that, when
    we consider a judgment on the pleadings, we accept his allegations as true. 
    Burton, 153 Wash. 2d at 422
    . But the factual allegations are not in dispute here. Both parties agree regarding the actual
    language contained in the notice of default, which are the facts; they disagree regarding the legal
    effect regarding that language, which is a legal conclusion. We are not required to accept Hagen’s
    legal argument that the language in the May 2009 notice of default accelerated the loan. See
    
    Burton, 153 Wash. 2d at 422
    (questions of law underlying a motion to dismiss are reviewed de novo).
    Accordingly, we affirm the superior court’s order on the motions.
    Similarly, there are no genuine issues of material fact that were presented to the court. The
    only dispute is whether the language in the May 2009 notice accelerated the loan. We already
    resolved that issue in Terhune—the loan at issue was not accelerated. Therefore, the superior court
    also properly denied Hagen’s motion for summary judgment on his counterclaim.
    Because the superior court properly granted U.S. Bank’s motion on the pleadings regarding
    Hagen’s counterclaim to quiet title and properly denied Hagen’s motion for summary judgment
    on his counterclaim to quiet title, the superior court did not err by granting U.S. Bank’s CR 12(c)
    9
    No. 51556-3-II
    motion, denying Hagen’s motion for summary judgment and dismissing Hagen’s counterclaim to
    quiet title. Accordingly, we affirm the superior court’s order on the motions.
    A majority of the panel having determined that this opinion will not be printed in the
    Washington Appellate Reports, but will be filed for public record in accordance with RCW 2.06.040,
    it is so ordered.
    Lee, A.C.J.
    We concur:
    Worswick, J.
    Cruser, J.
    10
    

Document Info

Docket Number: 51556-3

Filed Date: 11/5/2019

Precedential Status: Non-Precedential

Modified Date: 11/5/2019