Lopez v. JPMorgan Chase & Co.

ALICE LOPEZ, Appellant, v. JPMORGAN CHASE & CO., a New York Company; JPMORGAN CHASE BANK, NA, an Illinois National Association; DEUTSCHE BANK NATIONAL TRUST CO., a California Company, as Trustee on behalf of the holders of W AMU pass-through Certificates, Series 2005-AR6; NORTHWEST TRUSTEE SERVICES, INC., a Washington Corporation; and John Does 1-10, Respondents.

No. 34968-3-III

Court of Appeals of Washington, Division 3

April 18, 2017

UNPUBLISHED OPINION

SlDDOWAY, J.

Alice Lopez appeals the summary judgment dismissal of her challenge to the validity of the nonjudicial foreclosure of the deed of trust on her home.^[1]She does not dispute that she was in default in payment of the note secured by the deed of trust but raises now-familiar challenges to the authority of the eventual holder of her note and the last-appointed trustee to foreclose. We affirm.

FACTS AND PROCEDURAL BACKGROUND

In 2004, Alice Lopez borrowed $264, 000 from Washington Mutual Bank (WaMu), evidenced by a promissory note. The note was secured by a deed of trust on her home in Vancouver Washington.

In 2008, the Office of Thrift Supervision closed WaMu and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for the bank.

About four years later, in July 2012, the FDIC assigned the deed of trust to Deutsche Bank National Trust Company (Deutsche) as trustee for a real estate mortgage investment conduit (REMIC), WAMU Mortgage Pass-Through Certificate Series 2005-AR6 (Trust). A REMIC is a trust account into which mortgage-backed securities and/or whole mortgage loans are pooled, for the purpose of reconfiguring their principal and interest payments into securities having the risk and related investment characteristics desired by investors. See Cashmere Valley Bank v. Dep't of Revenue, 181 Wn.2d 622, 627 & n.6, 334 P.3d 1100 (2014). Assignment of the deed of trust to the REMIC was recorded on August 7, 2012.

In August 2012, Northwest Trustee Services (Northwest), acting as Deutsche's agent, sent Ms. Lopez a notice of default. According to the notice, Ms. Lopez owed $291, 927.37 on the note as of the date of the notice. Within the next couple of months, Deutsche took other steps in furtherance of nonjudicial foreclosure: it appointed Northwest as successor trustee under the deed of trust (the original trustee had been Fidelity National Title) and executed a proof of beneficiary declaration stating that as trustee of the REMIC it was the holder of the promissory note, an averment on whose truth and accuracy Northwest could rely.

Northwest took steps to conduct a foreclosure sale over the next three years, but Ms. Lopez prevented the sale from occurring by filing three successive bankruptcies. Finally, in August 2015, Northwest filed the amended notice of trustee's sale that triggered Ms. Lopez to file this lawsuit. She filed suit in October 2015, challenging the legality of the foreclosure and asserting a violation of the CPA. She moved unsuccessfully, to enjoin the sale and then moved, unsuccessfully, for discretionary review by this court. The property was sold at public auction on November 13, 2015.

A couple of months later, the defendants moved for summary judgment dismissing Ms. Lopez's complaint. The motions were granted and Ms. Lopez appeals.

ANALYSIS

An order granting summary judgment is reviewed de novo "considering the evidence and all reasonable inferences from the evidence in the light most favorable to . the nonmoving party." Keck v. Collins, 184 Wn.2d 358, 370, 357 P.3d 1080 (2015). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c).

Ms. Lopez identifies four issues on appeal that she contends made summary judgment improper. We set them forth as stated by Ms. Lopez's opening brief.

Issue 1: If a court decision irreconcilably conflicts with a constitutionally enacted statute, must the court decision yield?

Ms. Lopez disagrees with the Washington Supreme Court's decision in Brown v. Dep't of Commerce, 184 Wn.2d 509, 359 P.3d 771 (2015). In Brown, the court construed the following language in RCW 61.24.030(7)(a), which addresses one of the statutory requisites to a trustee's sale in the nonjudicial foreclosure context:

[F]or 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 or other obligation secured by the deed of trust shall be sufficient proof as required under this subsection.

(Emphasis added.) The court held that the holder of a promissory note-as the party entitled to enforce the note-is the beneficiary, regardless of whether the holder is also the owner of the note. Brown, 184 Wn.2d at 546.

Our Supreme Court's decision construing a statute cannot conflict with the statute as suggested by Ms. Lopez's issue statement, because it is within the courts' constitutional authority to determine what a statute means. Hale v. Wellpinit Sch, Dist. No. 49, 165 Wn.2d 494, 505-06, 198 P.3d 1021 (2009) (citing, among other authority, Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177, 2 L.Ed. 60 (1803)). This is understood by the legislature itself, which-even when it has disagreed with a Supreme Court decision, amended the law, and provided for retroactive application-has nonetheless recognized that the Supreme Court's construction controls the statute's meaning at least from the time of the court's decision until the effective date of the amendment. See id. at 502 (discussing legislative action to statutorily define "disability"). The court decision does not "yield."

Issue Two: If an assignment of a note and deed of trust is void ab initio, not voidable, may Plaintiff-Appellant assert the invalidity of the assign[ee 's] ownership and the beneficiary status [of] the assignee?

Issue Four: If the acceptance of an assignment of a note and deed of trust into a trust by the trustee is void, may Plaintiff-Appellant [a]ssert the void assignment as a basis for denying the trustee the right to foreclose?

Ms. Lopez's second and fourth identified issues relate to her contention that the FDIC's assignment of her deed of trust to the REMIC in 2005 was void. She contends it was void for three reasons: (1) it was untimely under the REMIC's pooling and service agreement, (2) it violated federal statutes relating to REMICs, and (3) it was a conveyance of property other than by deed. She recognizes that it is essential that assignment be void, not just voidable, in order for her to have standing. As a nonparty to the assignment, she has no standing to assert matters that would merely make that assignment voidable by the FDIC or the REMIC.^[2] Ms. Lopez's second and fourth assignments of error fail because she does not demonstrate that the assignment was void.

Pooling and service agreement

Ms. Lopez contends the assignment to the Trust was void because it was untimely under the REMIC's pooling and service agreement (PSA), which she alleges in her complaint had a "closing date" of April 26, 2005. Clerk's Papers (CP) at 7. The PSA is not in the record on appeal and the defendants answered the complaint, with respect to the allegation of the closing date, that the PSA "speaks for itself." CP at 135, 142. The PSA might well have stated that the trust would acquire no assets after a 2005 closing date: the name of the REMIC includes "2005, " postclosing asset acquisitions can have negative tax consequences for a REMIC, and the defendants do not contest the closing date in their briefing. But without a copy of the PSA, we will not assume that such a closing date, even if it exists, would make a post-closing transaction void rather than voidable.

It would be unusual to provide that a future transaction, even if not permitted by a contract, would be void. Making such a transaction voidable ordinarily provides just as much protection as making it void. And making such a transaction merely voidable provides parties with the flexibility to address unforeseen events. It is therefore more likely that any post-closing asset acquisition that violated the PSA would be voidable under the agreement rather than void.

In addition to presenting an inadequate record, the only two cases cited by Ms. Lopez as holding that assignment of an asset after a REMIC's closing date is void do not help her. She cites Glaski v. Bank of America, 218 Cal.App.4th 1079, 1083, 160 Cal.Rptr.3d 449 (2013) and Yvanova v. New Century Mortgage Corp., 62 Cal.4th 919, 365 P.3d 845, 199 Cal.Rptr.3d 66 (2016).

In Glaski, which involved a REMIC trust created under New York law, the California court relied for New York law on Wells Fargo Bank, NA v. Erobobo, 39 Misc.3d 1220(A), 972 N.Y.S.2d 147 (Sup. Ct. 2013) (unpublished opinion), rev'd, 127 A.D.3d 1176, 9 N.Y.S.3d 312 (2015). Glaski held, as had the intermediate New York court in Erobobo, that transfer of a loan into a trust in violation of the trust's pooling and service agreement was void under the New York Estates, Powers and Trusts Law § 7-2.4. 218 Cal.App.4th at 1095-96. The intermediate appellate court's decision in Erobobo was later reversed, however. See Erobobo, 127 A.D.3d at 1178. New York's highest court found that a mortgagor like Ms. Lopez lacks standing to challenge a violation of a pooling and servicing agreement:

In any event, Erobobo, as a mortgagor whose loan is owned by a trust, does not have standing to challenge the plaintiffs possession or status as assignee of the note and mortgage

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