James C. Blair, II v. Northwest Trustee Services , 193 Wash. App. 18 ( 2016 )

FILED
March 17, 2016
In the Office of the Clerk of Court
WA State Court of Appeals, Division Ill
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
JAMES C. BLAIR, II, ) No. 32816-3-111
)
Appellant, )
)
v. )
)
NORTHWEST TRUSTEE SERVICES, ) PUBLISHED OPINION
INC., BANK OF AMERICA, N.A., )
MORTGAGE ELECTRONIC )
REGISTRATION SYSTEMS, INC., )
FEDERAL HOME LOAN MORTGAGE )
CORPORATION and DOE )
DEFENDANTS 1 through 20, )
)
Respondents. )
LAWRENCE-BERREY, J. - James C. Blair appeals the trial court's summary
judgment dismissal of his Consumer Protection Act (CPA), chapter 19.86 RCW, and
misrepresentation claims against the respondents. Mr. Blair's claims arise out of a
nonjudicial foreclosure proceeding initiated against his residential property. Mr. Blair
predicates his CPA claims on asserted violations of the Deed of Trust Act (DTA), chapter
61.24 RCW. We hold that Northwest Trustee Services, Inc. (NWTS) violated the DTA
when it relied on an ambiguous beneficiary declaration, but that Mr. Blair failed to
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establish that NWTS's violation was causally linked to any injury he suffered. We
additionally hold that Mr. Blair's misrepresentation claims lack a factual basis. We
therefore affirm the trial court.
FACTS
In September 2008, James Blair refinanced his mortgage with Countrywide Bank,
FSB (Countrywide). Mr. Blair signed a promissory note and a deed of trust that
encumbered his Chelan County residence. The deed of trust identifies Land America as
the original trustee, Countrywide as the lender, and Mortgage Electronic Registration
Systems, Inc. (MERS) as the deed of trust beneficiary. The note likewise identifies
Countrywide as the lender, and is endorsed in blank by Countrywide. In August 2010,
Mr. Blair became delinquent on his mortgage payments. While Mr. Blair was seeking a
loan modification and was more than $34,000 behind on monthly payments, Bank of
America, N.A. (BoA) initiated nonjudicial foreclosure proceedings in spring 2012.
According to the Federal Home Loan Mortgage Corporation's (Freddie Mac's)
website, it became the owner of Mr. Blair's "mortgage" on September 25, 2008. Clerk's
Papers (CP) at 698. BoA has physically possessed Mr. Blair's note "for the benefit of
Freddie Mac and in accordance with Freddie Mac guidelines" since that time. CP at
1142. Freddie Mac routinely enters into agreements where home loan promissory notes it
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has bought are physically placed in the possession of a document custodian, who may also
be the loan servicer. Under Freddie Mac's document custody procedures handbook, the
primary duty of the document custodian is to "[h]old Notes and assignments in trust for
the sole benefit of Freddie Mac." CP at 1046. Consequently, Freddie Mac and the
document custodian "[ d]o not enter into any understanding, agreement or relationship
with any party to obtain, retain or claim any interest, including ownership or security, in
Mortgages owned by Freddie Mac, unless specifically approved in writing, in advance."
CP at 1046.
BoA serviced Mr. Blair's loan for Freddie Mac and was authorized "to take all
actions necessary for the collection and enforcement of the Loan, including receiving and
processing loan payments, communicating with [sic] regarding the loan, and, should such
action be necessary, initiating foreclosure, consistent with the Note, Deed of Trust and
Freddie Mac servicing guidelines." CP at 853.
After Mr. Blair became delinquent on his payments in August 2010, he applied for
a loan modification through BoA in 2011 and early 2012. BoA rejected Mr. Blair's
application on the asserted basis that he failed to provide the required documents.· Prior to
the initiation of the nonjudicial foreclosure proceedings, MERS assigned its interest in
Mr. Blair's deed of trust to BoA. In a document dated October 18, 2011, BoA appointed
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NWTS as the successor trustee of Mr. Blair's deed of trust. The document appointing
NWTS as the successor trustee refers to BoA as the beneficiary, and was publicly
recorded in March 2012.
In March 2012, NWTS issued a notice of default to Mr. Blair. The notice of
default states "[t]he owner of this note is Federal Home Loan Mortgage Corporation
(Freddie Mac)" and "[t]he loan servicer for this loan is Bank of America, N.A." CP at
925. In April 2012, NWTS issued and recorded a notice of trustee's sale, setting a
foreclosure date in August 2012. Prior to issuing the notice of trustee's sale, NWTS
received a beneficiary declaration from BoA that it relied on. The beneficiary declaration
stated:
[BoA] is the beneficiary (as defined by RCW §61.24.005(2)) and actual
holder of the promissory note or other obligation secured by the deed of
trust or has requisite authority under the RCW 62A.3-301 to enforce said
obligation for the above mentioned loan account.
CP at 566 (emphasis added).
Shortly before the scheduled trustee's sale, Mr. Blair filed this lawsuit, naming
NWTS, BoA, MERS, and Freddie Mac as defendants. In his complaint, Mr. Blair sought
(1) a temporary restraining order (TRO) and preliminary injunction prohibiting the
trustee's sale, (2) damages under the DTA against NWTS, (3) damages under the CPA
against all defendants, and (4) damages resulting from intentional or negligent
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misrepresentation against all defendants. The crux of Mr. Blair's complaint was that the
defendants misrepresented BoA as the DTA beneficiary, and because BoA was not the
DTA beneficiary, it had no lawful authority to appoint N\VTS as the successor trustee,
and therefore the entire nonjudicial foreclosure was unlawful.
Mr. Blair incurred attorney fees of $5,350.00 in enjoining the trustee's sale.
Additionally, Mr. Blair estimated that he incurred costs totaling $890.35 associated with
the TRO and preliminary injunction, including missing work at the title insurance
company he owns and operates. According to Mr. Blair's counsel, she has brought at
least 10 cases against NWTS in the last few years containing similar allegations (and is
aware of other attorneys doing the same).
NWTS moved for summary judgment in November 2013, arguing that it complied
with the DTA by relying on BoA' s beneficiary declaration, and that BoA was the note
holder and DTA beneficiary with the power to appoint the successor trustee. NWTS also
argued that any damages Mr. Blair incurred were proximately caused by his failure to
make his home loan payments, and that he cannot prove he suffered "actual prejudice"
relating to the nonjudicial foreclosure. BoA, MERS, and Freddie Mac (represented by the
same counsel) also moved for summary judgment in November 2013, similarly arguing
that BoA was the DTA beneficiary with the authority to appoint NWTS as the successor
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trustee. Mr. Blair opposed both summary judgment motions, arguing that the DTA only
allows a beneficiary who is also the owner of the note to initiate nonjudicial foreclosure.
During the summary judgment hearing, Mr. Blair argued that BoA's beneficiary
declaration was also insufficient because BoA had not proved it was in physical
possession of the note when the beneficiary declaration was prepared. Consequently, the
trial court allowed BoA to submit a supplemental declaration. The supplemental
declaration shows that BoA had physical possession of the note at the time the beneficiary
declaration was prepared.
The trial court granted summary judgment to all of the defendants. In a
memorandum decision, the trial court stated that BoA "actually held the note" based on
the "supplemental declaration establishing that it held the note continuously beginning
September 25, 2008 as the successor to BAC Home Loans." CP at 1148. The trial court
further held that although BoA's beneficiary declaration to NWTS was "insufficient" on
its face, BoA "supplemented the record to establish that it in fact held the requisite
documents at all relevant times to the attempted foreclosure in this case." CP at 1149.
Therefore, BoA "had the authority to appoint N\YTS as a successor trustee." CP at 1149.
As the trial court concluded that the DTA claim should be dismissed, it likewise
dismissed the CPA claim as it was predicated on the alleged DTA violation. Similarly,
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the intentional and negligent misrepresentation claims were dismissed as "plaintiff has
failed to establish a material false representation by any of the defendants that plaintiff
relied on and proximately caused him damage." CP at 1150. Mr. Blair timely appeals.
ANALYSIS
A. Standard of review
This court reviews an order granting summary judgment de novo. Lyons v. US.
Bank NA, 181 Wash. 2d 775, 783, 336 P.3d 1142 (2014). Under de novo review, this court
engages in the same inquiry as the trial court, viewing the facts and all reasonable
inferences in the light most favorable to the nonmoving party. Id. (quoting State v. Reid,
136 Wash. 2d 195, 201, 961 P.2d 333 (1998)). "The object and function of summary
judgment procedure is to avoid a useless trial." Barber v. Bankers Life & Cas. Co., 81
Wash. 2d 140, 144, 500 P.2d 88 (1972).
Summary judgment is appropriate only if the record demonstrates there is no
genuine issue of material fact and the moving party is entitled to judgment as a matter of
law. CR 56(c). Judgment as a matter oflaw for summary judgment purposes is
warranted "if reasonable people could reach one conclusion based on the evidence when
viewing the facts in the light most favorable to the nonmoving party." O.S. T v. Regence
BlueShield, 181 Wash. 2d 691, 703, 335 P.3d 416 (2014). "A material fact is one upon
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which the outcome of the litigation depends in whole or in part." Atherton Condo. Apt.-
Owners Ass 'n Bd. ofDirs. v. Blume Dev. Co., 115 Wash. 2d 506, 516, 799 P .2d 250 ( 1990).
"A trial is not useless, but is absolutely necessary where there is a genuine issue as to any
material fact." Barber, 81 Wash. 2d at 144.
The initial burden is on the moving party to show there is no genuine issue of any
material fact. CR 56(e). "The burden then shifts to the nonmoving party to set forth
specific facts demonstrating a genuine issue for trial." Am. Express Centurion Bank v.
Stratman, 172 Wash. App. 667, 673, 292 P.3d 128 (2012). "Mere allegations or conclusory
statements of facts unsupported by evidence are not sufficient to establish a genuine
issue." Rucker v. NovaStar Mortg., Inc., 177 Wash. App. 1, 10, 311 P.3d 31 (2013). This
court "may affirm summary judgment on any grounds supported by the record." Blue
Diamond Grp., Inc. v. KB Seattle 1, Inc., 163 Wash. App. 449, 453, 266 P.3d 881 (2011).
B. DTA overview
"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." Lyons,
181 Wash. 2d at 786. A statutory deed of trust is essentially an "equitable mortgage" as it
conveys title to the trustee to secure the home loan. Walker v. Quality Loan Serv. Corp.,
176 Wash. App. 294, 305, 308 P.3d 716 (2013). "When secured by a deed of trust that
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grants the trustee the power of sale if the borrower defaults on repaying the under lying
obligation, the trustee may usually foreclose the deed of trust and sell the property
withoutjudicial supervision." Bain v. Metro. Mortg. Grp., Inc., 175 Wash. 2d 83, 93, 285
PJd 34 (2012). The DTA strives to serve three main policies: (1) '"the nonjudicial
foreclosure process should remain efficient and inexpensive,'" (2) "' the process should
provide an adequate opportunity for interested parties to prevent wrongful foreclosure,' "
and (3) "' the process should promote the stability of land titles.'" Id. at 94 (quoting Cox
v. Helenius, 103 Wash. 2d 383, 387, 693 P.2d 683 (1985)).
When construing a statute, this court's "goal is to determine and effectuate
legislative intent." Swinomish Indian Tribal Cmty. v. Dep 't of Ecology, 178 Wash. 2d 571,
581, 311 PJd 6 (2013). First, this court must "give effect to the plain meaning of the
language used as the embodiment of legislative intent" where possible. Id. Second,
"when technical terms and terms of art are used," this court "give[s] these terms their
technical meaning." Id. Importantly, the DTA '"must be construed in favor of borrowers
because of the relative ease with which lenders can forfeit borrowers' interests and the
lack of judicial oversight in conducting nonjudicial foreclosure sales.'" Bain, 17 5 Wash. 2d
at 93 (quoting Udall v. TD. Escrow Servs., Inc., 159 Wash. 2d 903, 915-16, 154 PJd 882
(2007)).
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C. CPA liability
Mr. Blair acknowledges that he is not entitled to bring direct claims for pre-
foreclosure violations of the DTA. He therefore asserts that the respondents are liable
under the CPA for DTA violations.
The CPA prohibits "[ u]nfair methods of competition and unfair or deceptive acts
or practices in the conduct of any trade or commerce." RCW 19.86.020. "To succeed on
a CPA claim, a plaintiff must establish (I) an unfair or deceptive act (2) in trade or
commerce (3) that affects the public interest, (4) injury to the plaintiff in his or her
business or property, and (5) a causal link between the unfair or deceptive act complained
of and the injury suffered." Trujillo v. Nw. Trustee Servs., Inc., 183 Wash. 2d 820, 834-35,
355 P.3d 1100 (2015).
1. Unfair or deceptive act
Under the first element, "[w ]hether an act is unfair or deceptive is a question of
law." Id. at 835. Misrepresenting one's authority as the DTA beneficiary has the
capacity to deceive and is therefore an unfair or deceptive act. Bain, 175 Wash. 2d at 117.
Here, Mr. Blair alleges that respondents misrepresented BoA's status as the DTA
beneficiary.
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In addition, a trustee's failure to follow the nonjudical foreclosure procedures of
the DTA constitutes an unfair or deceptive act. Lyons, 181 Wash. 2d at 787. Here, Mr.
Blair alleges that NWTS failed to follow the DTA when it relied on an improper
beneficiary declaration.
a. Status ofBoA as beneficiary
The DTA beneficiary has the power to appoint a successor trustee and to instruct
the trustee to initiate nonjudicial foreclosure. RCW 61.24.010(2); .020; .030. According
to the DTA definitions, a "beneficiary" is "the holder of the instrument or document
evidencing the obligations secured by the deed of trust." RCW 61.24.005(2).
Washington's version of the Uniform Commercial Code (UCC), Title 62A RCW,
guides the interpretation of what constitutes a holder under the RCW 61.24.005(2)
definition of "beneficiary." Bain, 175 Wash. 2d at 104. Providing the commercial
background, the Bain court stated:
Traditionally, the "beneficiary" of a deed of trust is the lender who has
loaned money to the homeowner . . . . Lenders, of course, have long been
free to sell that secured debt, typically by selling the promissory note signed
by the homeowner. [The DTA] recognizes that the beneficiary of a deed of
trust at any one time might not be the original lender. The act gives .
subsequent holders of the debt the benefit of the act by defining
"beneficiary" broadly ....
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Id. at 88. When the note is sold, "the security instrument will follow the note, not the
other way around." Id. at 104.
Based on "[a] plain reading of the statute," the Bain court concluded "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." Id. at 89. Specifically, the Bain court held that MERS could not be a
DTA "beneficiary" as "a beneficiary must either actually possess the promissory note or
be the payee." Id. at 104 (emphasis added). "Bain thus recognized that holding the note
· is essential to beneficiary status." Brown v. Dep'to/Commerce, 184 Wash. 2d 509, 539,
359 P.3d 771 (2015).
Washington's UCC defines "holder" as "[t]he person in possession of a negotiable
instrument that is payable either to bearer or to an identified person that is the person in
possession." RCW 62A.1-201(21)(A); see RCW 62A.3-201. If indorsed in blank, the
note "becomes payable to bearer and may be negotiated by transfer of possession alone."
RCW 62A.3-205(b ).
In Brown, the Supreme Court of Washington recently held that the holder of the
note under article 3 of the UCC was the DTA beneficiary, despite Freddie Mac owning
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the beneficial interest of the note. Brown, 184 Wash. 2d at 514-15. The Brown court
provided background on Freddie Mac's involvement in the home loan industry:
Freddie Mac does not lend to homebuyers. Instead, Freddie Mac
purchases mortgage notes from the initial lenders. Often, Freddie Mac
pools hundreds of these mortgage notes into a trust, and the trustee issues
and sells securities to investors in various tranches of seniority .... Freddie
Mac guarantees the borrowers' monthly payments on the underlying notes.
If a borrower stops paying, Freddie Mac will step in and pay the investors.
Freddie Mac does all of this to further its congressionally mandated mission
to "provide ongoing assistance to the secondary market for residential
mortgages" to thereby "promote access to mortgage credit throughout the
Nation" and expand homeownership. 12 U.S.C. § 1716(3), (4).
Id. at 521. When Freddie Mac purchases a note, it authorizes the servicer to collect on the
note, negotiate modifications, and foreclose on the note if necessary. Id. at 521-22.
"Before the servicer institutes foreclosure proceedings, Freddie Mac provides the servicer
with actual or constructive possession of the original note." Id. at 523.
The Brown court stated that the definition of "holder" in RCW 62A.1-201(21)(A)
"does not tum on ownership," and "focuses on the party who possesses the note in order
to protect the borrower from being sued fraudulently or by multiple parties on the same
note." Id. at 525-26; accord John Davis & Co. v. Cedar Glen# Four, Inc., 75 Wash. 2d
214, 222-23, 450 P.2d 166 (1969) ("The holder of a negotiable instrument may sue
thereon in his own name, and payment to him in due course discharges the instrument. ...
It is not necessary for the holder to first establish that he has some beneficial interest in
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the proceeds."). The court noted that "[the servicer] is the holder of [the] note because
[the servicer] possesses the note and because the note, having been indorsed in blank, is
payable to bearer." Brown, 184 Wash. 2d at 535-36. Consequently, the Brown court
concluded that the servicer in possession of the note indorsed in blank was the DTA
beneficiary. Id. at 540.
Here, prior to the initiation of the nonjudicial foreclosure, BoA physically
possessed Mr. Blair's note indorsed in blank. A note indorsed in blank is payable to its
bearer. RCW 62A.3-205(b ). BoA became the holder by virtue of physically possessing
Mr. Blair's note indorsed in blank. RCW 62A.l-201(2l)(A); see RCW 62A.3-201. For
the first time at the summary judgment hearing, Mr. Blair attempted to dispute whether
BoA physically possessed the note. However, "[m]ere allegations or conclusory
statements of facts unsupported by evidence are not sufficient to establish a genuine
issue." Rucker, 177 Wash. App. at 10. We therefore conclude that there is no issue of
material fact disputing BoA's possession of Mr. Blair's note.
Mr. Blair argues that BoA is not the DTA beneficiary, and is only a document
custodian, as it holds the note for Freddie Mac's benefit and follows Freddie Mac's
guidelines. However, the Supreme Court of Washington in Brown rejected the argument
that the DTA beneficiary must also be the owner of the note. Brown, 184 Wash. 2d 509.
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Moreover, BoA stated that it was authorized to take actions that a beneficiary would take,
such as collecting on the note and initiating nonjudicial foreclosure. Because actual
physical possession of the original note indorsed in blank conveys holder status under
Washington law, Mr. Blair has not raised a genuine issue of fact regarding BoA's status
as the DTA beneficiary. See Bain, 175 Wash. 2d at 104; see also Brown, 184 Wash. 2d 509.
As a matter of law, because BoA was the beneficiary, the respondents did not
misrepresent BoA's DTA beneficiary status, and Mr. Blair has failed to establish CPA
liability against any of the respondents based on his first argument.
b. NWTS 's reliance on a defective beneficiary declaration
Under the DTA, the trustee is tasked with conducting the nonjudicial foreclosure.
RCW 61.24.040. However, "' a trustee is not merely an agent for the lender or the
lender's successors."' Lyons, 181 Wash. 2d at 787 (quoting Bain, 175 Wash. 2d at 93).
Although not rising to the level of a fiduciary duty, "[t]he trustee or successor trustee has
a duty of good faith to the borrower, beneficiary, and grantor." RCW 61.24.010(4). '" A
foreclosure trustee must "adequately inform" itself regarding the purported beneficiary's
right to foreclose, including, at a minimum, a "cursory investigation" to adhere to its duty
of good faith."' Trujillo, 183 Wash. 2d at 831-32 (quoting Lyons, 181 Wash. 2d at 787).
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The requisites of a trustee's sale are set forth in RCW 61.24.030. Pertinent to this
court's analysis, RCW 61.24.030(7)(a) provides:
That, for residential real property, before the notice of trustee's sale is
recorded, transmitted, or served, the trustee shall have proof that the
beneficiary is the owner of any promissory note or other obligation secured
by the deed of trust. 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 trustee is entitled to rely on the beneficiary's declaration unless it has violated its
duty of good faith. RCW 61.24.030(7)(b ); see Lyons, 181 Wash. 2d at 790 ("if there is an
indication that the beneficiary declaration might be ineffective, a trustee should verify its
veracity before initiating a trustee's sale to comply with its statutory duty").
The Trujillo court discussed the first sentence ofRCW 61.24.030(7)(a). It
reiterated that a trustee must "have proof that the beneficiary actually owns the note on
which the trustee is foreclosing." Trujillo, 183 Wash. 2d at 832. "A trustee must have the
requisite proof of the beneficiary's ownership of the note before recording, transmitting,
or serving the notice of trustee's sale." Id. at 834 n.10.
The Trujillo court also discussed the second sentence ofRCW 61.24.030(7)(a).
The Trujillo court held that its recent decision in Lyons was dispositive. Trujillo, 183
Wash. 2d at 833. In Lyons, the beneficiary declaration stated, "'Wells Fargo Bank, NA, is
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the actual holder of the promissory note ... or has requisite authority under RCW 62A.3-
301 to enforce said [note]."' Lyons, 181 Wash. 2d at 780 (emphasis added). The Lyons
court reasoned:
On its face, [the beneficiary declaration] is ambiguous whether the
declaration proves [the purported beneficiary] is the holder or whether [the
purported beneficiary] is a nonholder in possession or person not in
possession who is entitled to enforce the provision under RCW 62A.3-301.
But [the trustee] can still prove that [the purported beneficiary] was the
owner of the note in a way other than through the beneficiary declaration
referenced in RCW 61.24.030(7)(a). Thus, there remains a material issue of
fact as to whether [the purported beneficiary] was the owner prior to
initiating the trustee's sale. [The trustee] will need to furnish that proof but
may not just rely on this ambiguous declaration.
Id. at 791.
Here, BoA' s beneficiary declaration stated that it "is the beneficiary (as defined by
RCW §61.24.005(2)) and actual holder of the promissory note or other obligation secured
by the deed of trust or has requisite authority under the RCW 62A.3-301 to enforce said
obligation for the above mentioned loan account." CP at 515 (emphasis added). As
acknowledged by the trial court, and consistent with Trujillo and Lyons, NWTS cannot
satisfy its DTA duties by relying on this ambiguous beneficiary declaration.
The trial court allowed BoA to file a supplemental declaration. The supplemental
declaration stated that BoA had held the promissory note for all times relevant. Based on
this, the trial court excused NWTS's violation. In doing so, the trial court erred.
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The supplemental declaration came after the fact, and NWTS had to comply with
RCW 61.24.030(7)(a)'s proof requirement "before recording, transmitting, or serving the
notice oftrustee's sale." Trujillo, 183 Wash. 2d at 834 n.10. Because NWTS relied on the
ambiguous beneficiary declaration prior to recording, transmitting, or serving the notice
of trustee's sale, it violated RCW 61.24.030(7)(a).
2. Injury to the plaintiff in his business or property
NWTS argues that Mr. Blair cannot satisfy the injury element of his CPA claim.
"Because the CPA addresses 'injuries' rather than 'damages,' quantifiable monetary loss
is not required." Frias v. Asset Foreclosure Servs. Inc., 181 Wash. 2d 412, 431, 334 P.3d
529 (2014). "The injury element does not require that the homeowner lose their property
in order to bring a claim under the CPA." Lyons, 181 Wash. 2d at 786 n.4. Further an
"injury" can be based on unlawful collection practices even where there is no dispute as
to the validity of the underlying debt, and the element "can be met even where the injury
alleged is both minimal and temporary." Frias, 181 Wash. 2d at 431. Consequently,
attorney fees and costs incurred in enjoining a wrongful trustee's sale may qualify as an
"injury" under the CPA. See Trujillo, 183 Wash. 2d at 837 ("investigation expenses and
other costs associated with dispelling the uncertainty about who owns the note" are
sufficient); see also Panag v. Farmers Ins. Co. of Wash., 166 Wash. 2d 27, 62-63, 204 P.3d
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885 (2009) (costs to consult an attorney, resulting from a deceptive business practice,
establish injury). We conclude that Mr. Blair has satisfied the injury element of his CPA
claim by virtue of his expenditure of attorney fees and costs associated with investigating
NWTS's authority to initiate foreclosure proceedings.
3. Causal link between the unfair or deceptive act complained of and the
injury suffered
NWTS argues that Mr. Blair cannot satisfy the causation element of his CPA
claim. To satisfy the causation element, a "plaintiff must establish that, but for the
defendant's unfair or deceptive practice, the plaintiff would not have suffered an injury."
Indoor Billboard/Wash., Inc. v. lntegra Telecom of Wash., Inc., 162 Wash. 2d 59, 84, 170
P.3d 10 (2007). This requires "a causal link between the misrepresentation and the
plaintiffs injury." Id. at 83. The existence of a causal link is usually a factual question.
Id.
Although causation generally is a question of fact, one must nevertheless aver facts
that support a causal link. In one declaration, Mr. Blair states that he incurred attorney
fees and costs investigating the improper designation of BoA as beneficiary and BoA's
resulting improper appointment ofNWTS as successor trustee. We have held that BoA
was the beneficiary and, as the beneficiary, its appointment ofNWTS as successor trustee
was not improper. Mr. Blair does not aver that NWTS's violation ofRCW
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61.24.030(7)(a) caused him any injury. We are unable to locate any facts in the record
that support a causal link between NWTS's violation ofRCW 61.24.030(7)(a) and Mr.
Blair's injury.
Moreover, NWTS's wrongful act was its violation ofRCW 61.24.030(7)(a)'s
requirement that it investigate BoA' s status prior to recording, transmitting, or serving the
notice of trustee's sale. Had NWTS complied with RCW 61.24.030(7)(a), it would have
learned that BoA was the holder of the note indorsed in blank, and that institution of the
nonjudicial foreclosure proceeding was arguably proper. 1 Consequently, NWTS's
violation ofRCW 61.24.030(7)(a) did not cause a wrongful initiation of foreclosure.
Because the initiation of foreclosure was not wrongful, Mr. Blair has failed to establish a
causal link between NWTS's wrongful act and his injury. We conclude that Mr. Blair has
failed, as a matter of law, to establish the causal link element of his CPA claim against
NWTS.
4. Actual prejudice
1
"[A ]cts or practices performed in good faith under an arguable interpretation of
existing law do not constitute unfair conduct violative of the consumer protection law."
Perry v. Island Sav. & Loan Ass 'n, 101 Wash. 2d 795, 810, 684 P.2d 1281 (1984); accord
Leingang v. Pierce Co. Med. Bureau, Inc., 131 Wash. 2d 133, 155, 930 P.2d 288 (1997);
Courchaine v. Commonwealth Land Title Ins. Co., 174 Wash. App. 27, 49, 296 P.3d 913
(2012); RCW 19.86.920 ("It is, however, the intent of the legislature that this act shall not
be construed to prohibit acts or practices which are reasonable in relation to the
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NWTS asks that we require borrowers who bring a CPA claim premised on the
wrongful nonjudicial foreclosures to establish that the DTA violation actually prejudiced
them. NWTS cites a number of unpublished cases from Washington federal courts to
support its request. We see no need to adopt the requested rule. See Halvorson v. Dahl,
89 Wash. 2d 673, 676, 574 P.2d 1190 (1978). We prefer to base our decision on the prima
facie framework of a CPA claim. We note that the failure to establish a causal link
between a wrongful act and a borrower's injury would have led to similar results in the
federal cases.
D. Intentional/negligent misrepresentation liability
Although Mr. Blair's opening brief refers to his claim as "Intentional and/or
Negligent Misrepresentation," he only provides argument relating to negligent
misrepresentation. Appellant's Br. at 27. We therefore restrict our analysis to the issue
briefed. Holland v. City of Tacoma, 90 Wash. App. 533, 538, 954 P.2d 290 (1998).
"Washington has adopted the RESTATEMENT (SECOND) OF TORTS with respect to
the elements of negligent misrepresentation." ESCA Corp. v. KPMG Peat Marwick, 135
Wash. 2d 820, 826, 959 P .2d 651 ( 1998). Each element must be proved by clear, cogent,
development and preservation of business .... ").
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No. 32816-3-111
Blair v. Nw. Trustee Servs.
and convincing evidence. Lawyers Title Ins. Corp. v. Baik, 147 Wash. 2d 536, 545, 55 P.3d
619 (2002). The Restatement (Second) of Torts describes negligent misrepresentation as
[o]ne who, in the course of his business, profession or employment, or in
any other transaction in which he has a pecuniary interest, supplies false
information for the guidance of others in their business transactions, is
subject to liability for pecuniary loss caused to them by their justifiable
reliance upon the information, if he fails to exercise reasonable care or
competence in obtaining or communicating the information.
RESTATEMENT (SECOND) OF TORTS§ 552(1) (AM. LAW. INST. 1977), quoted in
Lawyers Title Ins. Corp., 14 7 Wash. 2d at 545. In the context of alleged negligent
misrepresentation based on information provided in nonjudicial foreclosure forms,
the threshold concern is whether the forms contained false or misleading
information. Mann v. Household Fin. Corp. Ill, 109 Wash. App. 387, 391-92, 35
P.3d 1186 (2001).
Here, Mr. Blair argues that "Defendant/Appellees supplied false information to
Mr. Blair and the public at large when they indicated through publicly recorded
documents that [BoA], not Freddie Mac, was the beneficiary of Mr. Blair's deed of
trust/promissory note and had the authority to appoint NWTS as a foreclosure trustee."
Appellant's Br. at 28. We have held that BoA, because it is the holder of the note
indorsed in blank, is the DTA beneficiary. As the lawful beneficiary, it had the power to
appoint NWTS to serve as successor trustee. Because Mr. Blair has failed to establish
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No. 32816-3-111
Blair v. Nw. Trustee Servs.
that any entity supplied false information, his negligent misrepresentation claim was
properly dismissed on summary judgment.
Affirmed.
Lawrence-Berrey, J.
WE CONCUR:
F~i,i
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