Bavand v. Onewest Bank

176 Wash.App. 475

309 P.3d 636

Marisa BAVAND, Appellant,

v. ONEWEST BANK, F.S.B., a federally chartered Savings Bank; Regional Trustee Services Corporation, a Washington corporation; Mortgage Electronic Registration Systems, Inc., a Delaware corporation, Respondents,Doe Defendants 1–10, Defendants.

No. 68217–2–I.

Court of Appeals of Washington, Division 1.

Sept. 9, 2013.

Richard Llewelyn Jones, Kovac & Jones, PLLC, Bellevue, WA, for Appellant.

Joshua Saul Schaer, Routh Crabtree Olsen, P.S., Bellevue, WA, Fred B. Burnside, Davis Wright Tremaine LLP, Nicolas Adam Daluiso, Attorney at Law, Rhonna Kollenkark, Robinson Tait PS, Seattle, WA, for Respondent.

COX, J.

[176 Wash.App. 482]¶ 1 Primarily at issue in this appeal of a CR 12(b)(6) dismissal is whether OneWest Bank, FSB and the Mortgage Electronic Registration Systems, Inc. (MERS) met their burden to show that Marisa Bavand failed to show any set of facts that would justify granting relief.¹ Also at issue is whether the trial court properly granted the motion to validate the trustee's sale of Bavand's property by Regional Trustee Services Corporation (RTS).

¶ 2 We hold that the motion to dismiss was, for the most part, erroneously granted. The order validating the trustee's sale was also erroneously granted. We affirm in part, reverse in part, and remand for further proceedings.

¶ 3 In 2007, Marisa Bavand obtained a loan for $722,950 from IndyMac Bank, FSB. The loan was evidenced by a promissory note that was secured by a deed of trust encumbering her property. The deed of trust named “IndyMac Bank, F.S.B.” as the “Lender” and Ticor Title Insurance Co. as the “Trustee.” It also named MERS as “the beneficiary under this Security Instrument” and “as a nominee for Lender and Lender's successors and assigns.”

¶ 4 On December 15, 2010, “OneWest Bank, FSB,” claiming to be the “present beneficiary” of Bavand's deed of trust, executed an Appointment of Successor Trustee.² This document purported to appoint RTS “as Successor Trustee” under Bavand's deed of trust.³ It appears that OneWest executed this assignment anticipating the commencement of a nonjudicial foreclosure of the deed of trust by RTS.

¶ 5 On December 16, 2010, one day after this purported appointment of RTS as successor trustee, MERS executed an Assignment of Deed of Trust.⁴ This document stated, among other things, that:

FOR VALUE RECEIVED, the undersigned, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. AS NOMINEE FOR INDYMAC BANK, F.S.B., A FEDERALLY CHARTERED SAVINGS BANK, by these presents, grants, bargains, sells, assigns, transfers and sets over unto OneWest Bank, FSB, all beneficial interest under that certain Deed of Trust dated 8/7/2007, and executed by Marisa Bavand....

Together with the Note or Notes therein described....[ ⁵]

¶ 6 On January 6, 2011, RTS commenced a nonjudicial foreclosure proceeding of the deed of trust encumbering Bavand's property by mailing a “Notice of Foreclosure” to her for allegedly defaulting in payments under the promissory note. The trustee's sale was scheduled for May 13, 2011.

¶ 7 Eight days before the then scheduled trustee's sale, Bavand commenced this action against OneWest, MERS, RTS, and others, seeking declaratory and other relief. RTS postponed the scheduled trustee's sale to a later date upon learning of this action.

¶ 8 Over a month after filing this action, Bavand moved for a TRO to enjoin the rescheduled trustee's sale of her property. On June 10, the trial court denied her motion because of her failure to provide proof of service and proper notice of the motion. But the court granted Bavand's renewed motion for a TRO, and an order restraining the trustee's sale was entered on June 17, 2011. The order was expressly conditioned on Bavand providing a “[b]ond ... in [the] amount of $5,041.08 payable 6/17/11 and on the 17th of every month thereafter unless amended by court order.” ⁶ At oral argument in this appeal, Bavand conceded that she did not make any of these payments.

¶ 9 RTS conducted the trustee's sale of the Bavand property sometime on June 17, the same date the TRO was entered. At oral argument in this appeal, the parties confirmed to this court that, following this sale, RTS recorded with the county auditor a trustee's deed that conveyed the property to “OWB REO, Inc,” the successful bidder at this trustee's sale.

¶ 10 By its consolidated order entered on November 29, 2011, the trial court ruled on several motions made by Bavand, two by OneWest and MERS, and others by RTS. Specifically, this order denied most of Bavand's motions and granted all of the defendants' motions. Among the latter motions, the court granted the joint CR 12(b)(6) motion to dismiss of OneWest and MERS as well as RTS's motion to validate its June 17, 2011 trustee's sale. On December 20, 2011, the trial court denied Bavand's motion for reconsideration of the order to vacate the trustee's sale.

¶ 11 This appeal followed.

FAILURE TO STATE A CLAIM

¶ 12 Bavand first argues that the trial court erred when it granted MERS and OneWest's joint CR 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. Specifically, she argues that a material procedural defect in the appointment of RTS as successor trustee under the deed of trust made the trustee's sale invalid. We agree that Bavand has stated sufficient facts to demonstratea material procedural defect in RTS's appointment as successor trustee. Thus, she has made out a claim for relief.

¶ 13 Under CR 12(b)(6), a motion to dismiss for failure to state a claim “should be granted only if the plaintiff cannot prove any set of facts which would justify recovery.” ⁷ “ ‘[A]ny hypothetical situation conceivably raised by the complaint defeats a CR 12(b)(6) motion if it is legally sufficient to support plaintiff's claim.’ ” ⁸ Such motions “should be granted only ‘sparingly and with care.’ ” ⁹

¶ 14 Either party may submit documents not contained in the original complaint for consideration by the court in assessing a CR 12(b)(6) motion.¹⁰ Such submissions generally convert a CR 12(b)(6) motion into a motion for summary judgment.¹¹

¶ 15 Summary judgment is appropriate only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.¹² This court reviews de novo a trial court's order granting summary judgment.¹³

The Deeds of Trust Act

¶ 16 Chapter RCW 61.24, the Deeds of Trust Act, governs deeds of trust in Washington.

When [a promissory note is] secured by a deed of trust that grants the trustee the power of sale [and] if the borrower defaults on repaying the underlying obligation, the trustee may usually foreclose the deed of trust and sell the property without judicial supervision.[ ¹⁴]

The supreme court has repeatedly stated that the Deeds of Trust Act “ ‘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.’ ” ¹⁵

¶ 17 Under the Deeds of Trust Act, only a properly appointed trustee may conduct a nonjudicial foreclosure. Moreover, only a proper beneficiary has the power to appoint a successor to the original trustee named in the deed of trust.

¶ 18 Former RCW 61.24.010(2) (2009) states:

The trustee may resign at its own election or be replaced by the beneficiary .... If a trustee is not appointed in the deed of trust, or upon the resignation, incapacity, disability, absence, or death of the trustee, or the election of the beneficiary to replace the trustee, the beneficiary shall appoint a trustee or a successor trustee. Only upon recording the appointment of a successor trustee in each county in which the deed of trust is recorded, the successor trustee shall be vested with all powers of an original trustee.[[ ¹⁶

¶ 19 The plain words of this statute establish that the beneficiary of a deed of trust is the sole entity entitled to appoint a successor trustee if the beneficiary elects to replace the original trustee named in that deed of trust. This statute makes equally clear that only upon the recording of the appointment of a successor trustee with the auditor in the relevant county is a successor trustee “vested with all the powers of an original trustee.” ¹⁷ Among these powers is, of course, the power to conduct a nonjudicial foreclosure culminating in a trustee's sale.

¶ 20 The only reasonable reading of this statute is that the successor trustee must be properly appointed to have the powers of the original trustee. ¹⁸ Thus, a dispositive question in this appeal is whether RTS was properly appointed as a successor trustee by the beneficiary of Bavand's deed of trust. We conclude that this record shows that RTS was not properly appointed as a successor trustee.

¶ 21 Here, the CR 12(b)(6) motion was supported by numerous documents. Among these documents is the Appointment of Successor Trustee, dated December 15, 2010, that “OneWest Bank, FSB” executed.¹⁹ In that document, OneWest states that it is “the present beneficiary” of the deed of trust that Bavand executed in 2007.²⁰ The jurat indicates the document was signed in Texas on the same date as the date of the document: December 15, 2010.²¹

¶ 22 Notwithstanding OneWest's representation in this appointment that it was “the present beneficiary” of Bavand's deed of trust, this record shows that was not true. Rather, on December 15, 2010, MERS was the named beneficiary in that instrument.²²

¶ 23 We note that a thorough review of this record shows that OneWest is not named either in the deed of trust or the promissory note that Bavand executed in favor of IndyMac Bank.²³ Thus, this record fails to establish that OneWest correctly claimed on December 15, 2010 that it was then the “present beneficiary” under the deed of trust.

¶ 24 Because OneWest was not the beneficiary of the deed of trust at the time it attempted to appoint a successor trust...