Michael Levitz v. Mortgage Electronic Registration Systems, Inc. ( 2013 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
MICHAEL LEVITZ,
No. 69034-5-I
Appellant,
DIVISION ONE
v.
UNPUBLISHED OPINION
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.;
CAPITAL ONE, NA; US BANK
NATIONAL ASSOCIATION, as trustee
for and CHEVY CHASE FUNDING
LLC MORTGAGE-BACKED
CERTIFICATES SERIES 2005-1;
US BANK, N.A., as trustee for CCB en
LIBOR 2005-1 SERIES TRUST;
DOES I through XX inclusive; and
BISHOP WHITE MARSHALL &
WEIBEL, PS, (f/k/a BISHOP WHITE
AND MARSHALL, PS),
FILED: November 25, 2013
Respondents.
Grosse, J. — Dismissal of claims alleging fraud and violations of the deed of
trust act, chapter 61.24 RCW, and the Consumer Protection Act, chapter 19.86 RCW, is
proper when, as here, the claims all relate to a foreclosure proceeding and the
proceeding never occurred, the plaintiff abandoned his wrongful foreclosure claim, and
the plaintiff fails to show he was harmed by the alleged violations and fraud.
Accordingly, we affirm.
FACTS
On April 16, 1999, Inesa Levitz took title to a house located on 3718 East Alder
Street, Seattle, Washington, 98122. The deed conveyed the property to "Inesa Levitz, a
single person," even though she had been married to Michael Levitz since 1993.
No. 69034-5-1 / 2
On September 1, 2004, Inesa1 borrowed $560,000 from Chevy Chase Bank,
F.S.B. and signed a promissory note secured by a deed of trust on the East Alder Street
house. Michael was not a party to either the note or the deed of trust, which identified
the borrower as "Inesa Levitz, a single woman as her sole and separate property." The
deed of trust identified the lender as Chevy Chase Bank, F.S.B., and the beneficiary as
Mortgage Electronic Registration Systems (MERS), "a separate corporation that is
acting solely as a nominee for Lender and Lender's successors and assigns." First
American Title Insurance Company was named trustee under the deed of trust. Chevy
Chase Bank, F.S.B. later endorsed Inesa's note to "US Bank, N.A., as Trustee," and US
Bank became the holder of the note.
In October 2008, Inesa became delinquent on the note. In June 2009, she and
Michael separated. In June 2009, MERS, identified as nominee for Chevy Chase Bank,
F.S.B., appointed Bishop White & Marshall, P.S. (Bishop White) as successor trustee to
First American Title under Inesa's deed of trust. This appointment was recorded on July
1,2009.
On July 17, 2009, Bishop White recorded and mailed a notice of trustee's sale to
Inesa Levitz and "John Doe Levitz, Spouse of Inesa Levitz" at the East Alder Street
address. The notice identified MERS, "acting solely as a nominee for Chevy Chase
Bank, F.S.B. and its successors and assigns," as the entity to which the borrower's
obligation was due. The notice also stated that notice of default had been given to the
borrower, Inesa, on May 28, 2009.
On July 30, 2009, Capital One, N.A., acquired Chevy Chase Bank, F.S.B.
1To avoid confusion, the parties will be referred to by their first names.
2
No. 69034-5-1 / 3
Thereafter, Capital One, as agent for US Bank, serviced Inesa's loan on the note.
In August 2009, Michael filed for dissolution of his marriage.
On March 10, 2010, Bishop White received from Capital One a Foreclosure Loss
Mitigation form indicating that Inesa's loan was in default. The completed formed
mistakenly stated that "U.S. Bank, N.A. as trustee for CCB Libor Series 2005-1 Trust"
was the beneficiary of Inesa's loan, when US Bank in fact owned the note as trustee for
"the Chevy Chase Funding LLC Mortgage Backed Certificates Series 2005-1."
On April 12, 2010, Bishop White mailed notices of default to Inesa Levitz and
John Doe Levitz at the East Alder Street address. The amount of the loan delinquency
was $74,384.07. The default notice mistakenly identified the note's owner as "U.S.
Bank, NA as trustee for CCB Libor Series 2005-1 Trust, C/o [MERS] as nominee for
Capital One, N.A. Bank, F.S.B. and its successors and assigns," instead of trustee for
Chevy Chase Funding LLC Mortgage Backed Certificates Series 2005-1, and directed
tender of payoff monies to Bishop White. The default notice identified Capital One as
the servicer of the obligation secured by the deed of trust.
On May 12, 2010, Michael recorded a Claim of Spouse in Community Real
Property, referencing the East Alder Street property. On October 27, 2010, Michael
obtained a Decree of Dissolution by default. The decree awarded him the East Alder
Street house subject to all liens and encumbrances.
On March 17, 2011, Capital One prepared a Declaration of Ownership and
provided it to Bishop White. The declaration stated that "US Bank, NA as trustee
relating to the Chevy Chase Funding LLC Mortgage Backed Certificates, Series 2005-1
is the owner of the Promissory Note evidencing [Inesa's] loan," and "[t]he Note has not
No. 69034-5-1/4
been assigned or transferred to any other person or entity."
In April 2011, Bishop White mailed to Inesa Levitz and John Doe Levitz at the
East Alder Street address, an Amended Notice of Foreclosure, and Amended Notice of
Trustee's Sale to occur on June 10, 2011. The foreclosure notice stated that the
amended notice of sale "is a consequence of default(s) in the obligation to US Bank, NA
as trustee relating to the Chevy Chase Funding LLC Mortgage Backed Certificates,
Series 2005-1, the Beneficiary of your Deed of Trust." The notices characterized the
deed of trust as securing "an obligation in favor of [MERS], a separate corporation that
is acting solely as a nominee for Chevy Chase Bank, F.S.B., and its successors and
assigns." The notices also stated that the deed of trust "was assigned on March 25,
2011 to US Bank, NA as trustee relating to the Chevy Chase Funding LLC Mortgage
Backed Certificates, Series 2005-1."
On May 11, 2011, Michael filed a complaint against MERS, US Bank, and Bishop
White seeking a temporary restraining order and injunction against the June 10 trustee's
sale. The complaint also sought damages for wrongful foreclosure, gross negligence,
breach of the duty of good faith under the deed of trust act, and violations of the
Consumer Protection Act (CPA). The trustee continued the sale to September 9, 2011
and ultimately cancelled the sale. Michael also served Capital One with the summons
and complaint and Capital One filed an answer.
On July 14, 2011, the superior court vacated the Levitzs' dissolution decree,
except to the extent that it dissolved the marriage. Michael appealed the order. In
September 2012, this court upheld the order to vacate in an unpublished opinion and
No. 69034-5-1 / 5
awarded attorney fees to Inesa for a frivolous appeal.2
On April 19, 2012, MERS, Capital One, and US Bank moved to dismiss Michael's
lawsuit, which had been pending for approximately 11 months. Bishop White joined in
the motion. Michael had conducted no discovery and there were no foreclosure
proceedings pending. The trial court granted the motion. Michael appeals.
ANALYSIS
Michael's appeal is limited to review of the trial court's dismissal of his claims of
fraud, breach of the duty of good faith, and violations of the CPA; he does not seek
review of the additional claims of wrongful foreclosure and negligence. Michael
contends that the trial court erred by dismissing his claims for lack of standing because
he had a community property interest in the East Alder Street house that was subject to
the foreclosure sought by the defendants.
The trial court properly dismissed the claims. On this record, Michael fails to
show that he was injured or prejudiced by any of the alleged conduct of the defendants.
No foreclosure proceedings are being pursued against the property and he has
abandoned his claim of wrongful foreclosure. The remaining claims that are subject to
this appeal stem from the abandoned wrongful foreclosure claim and do not establish a
claim for which relief can be granted.
The fraud claim alleges:
4.2 Defendants fraudulently recorded numerous documents relating to
Plaintiff's aforementioned real property with the King County Recorder's
Office.
4.3 Defendants made fraudulent assignments to unauthorized and/or
illegal parties, and recorded such assignments with the King County
Recorder's Office.
2
In re Marriage of Levitz, noted at 170 Wash. App. 1018 (2012).
5
No. 69034-5-1 / 6
4.4 The existence fraud requires Defendants, jointly and severally, to
produce the original promissory note, pursuant to the laws of Washington.
4.5 As a direct and proximate result of the actions of Defendants,
Plaintiff has suffered damages in an amount to be determined at the time
of trial.
The claim for breach of good faith and fair dealing alleges that the defendants breached
their duty of good faith and fair dealing owed "to Plaintiff, the borrower," by failing to
provide "Plaintiff with fair and honest disclosure of all facts that might be presumed to
influence him in regards to his actions, including those facts favorable to a creditor and
adverse to Plaintiffs interests as it relates to the Deed of Trust and Promissory Note
which are the subject of this lawsuit." It further alleges that the defendants breached
their "duty to report truthful and complete information on documents that they recorded
in the records of King County, or failed to record in King County, as required by
Washington law, and to act in conformity with the laws of the State of Washington
relating to mortgage servicing." The CPA claim alleges:
6.5 The Defendants wrongfully caused to be sent, under RCW
19.16.250(15), et. seq., notices of default and debt collection letters in an
attempt to collect various sums of money they claimed were owed, when
in fact, under statute, Defendants knew or should have known that they
could not legally take action against the Plaintiffs in violation of the
Consumer Protection Act for which the Plaintiffs seek civil penalties as
provided under the statute.
6.6. Under the circumstances, where defendants have intentionally,
willfully, and wantonly violated the Washington Deed of Trust Act, RCW
61.24, et. seq., Plaintiffs request that this Court, pursuant to RCW
19.86.090, award threefold actual damages as provided by the Statute.
Absent a foreclosure, Michael fails to show on this record any harm to him that
resulted from this alleged fraud, provision of inaccurate information, failure to record, or
defective notices. Indeed, the undisputed facts in the record establish that neither the
deed of trust nor the promissory note identified Michael as grantor, beneficiary, or
No. 69034-5-1 / 7
borrower, Inesa defaulted on the loan, Michael made no loan payments, and Michael
lived in the East Alder Street house rent free. We further note that, on this record,
Michael has not established the community property interest upon which his claims are
based. Michael points to the fact that Inesa purchased and refinanced the house during
the marriage, despite her claiming to be a single woman at the time, and that he filed a
claim of community property interest in the house in May 2010, before the divorce.
While he acknowledges that the dissolution decree awarding him the house has since
been vacated, he contends that this simply returns him to the position of having a
community property interest in the house. But no judicial determination of that interest
has been made since the vacation of the divorce decree, and without further facts in the
record relating to the circumstances of the house purchase and refinance and the status
of the marriage at that time, we cannot presume that he does in fact have such a legal
interest.3 Accordingly, the trial court properly dismissed the claims.
We affirm.
J
WE CONCUR
.•••^0. ~- ^'T'
3 For example, if the parties were in fact separated at that time or the property was
purchased with funds that were Inesa's separate property, she may have a claim that it
is her separate property.
7