IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON BIG BLUE CAPITAL PARTNERS OFWASHINGTON, LLC, Appellants,

v. McCarthy & holthus llp; quality loan service corporation; quality loan service corporation of washington, Respondents. No. 72623-4-1 DIVISION ONE
UNPUBLISHED OPINION

FILED: November23, 2015 Leach, J. — Consistentwith its business model, Big Blue Capital Partners 

### ofWashington LLC purchased real propertyfrom a bankruptcytrustee knowing it was in nonjudicial foreclosure. Atthetime ofthe purchase, Big Blue agreed that the nominal price reflected uncertainties and disputes regarding the accounting, 

### validity, and enforceability of the deed of trust, the authority ofthe foreclosing entities to initiate foreclosure, and the burdensome amount of time, effort, and 

### expense that Big Blue would likely incur in resolving those disputes and uncertainties. Shortly before the pending trustee's sale, Big Blue sued 

### respondents for damages and other relief under the deeds of trust act (DTA), 

### chapter 61.24 RCW, and the Consumer Protection Act (CPA), chapter 19.86No. 72623-4-1 / 2



### RCW. The superior court dismissed Big Blue's claims on summaryjudgment. We affirm. FACTS 

### On October 16, 2006, David Riggle signed an adjustable rate note to pay a $300,000 loan from Homecomings Financial LLC. The deed oftrust securing 

### the note named Mortgage Electronic Registration Systems Inc. (MERS) as the beneficiary "acting solely as a nominee forLenderand Lender's successors and assigns." 

### In 2011, Riggle stopped making payments on the loan. Nothing in the record suggests that Riggle had any uncertainty aboutwhom to make payments to or who to contactregarding a possible loan modification. 

### In August 2011, MERS assigned the deed of trust to Aurora Bank FSB. On August 1, 2011, a vice-president of Aurora signed a "Declaration of Beneficiary" stating, "Aurora Bank FSB is the holder of the Promissory Note" evidencing Riggle's loan. 

### On June 19, 2012, Aurora recorded a notice of appointment of Quality 

### Loan Service Corporation ofWashington as successortrustee underthe deed of

trust. 

### Around this time, Nationstar Mortgage LLC purchased Aurora's servicing rights to numerous loans, including Riggle's.

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On August 24, 2012, Aurora executed an assignment of its interest inthe deed oftrust to Nationstar. From October 2012 to June 2013, Quality issued four notices of nonjudicial foreclosure sale for Riggle's property. All of the notices were either discontinued or expired by operation of law without a sale. Although the notices
are not part ofthe record, Big Blue alleges that the notices listed Quality as the trustee and Nationstaras the assignee ofthedeed oftrust. On January 2, 2013, Riggle filed a Chapter 7 bankruptcy. In his bankruptcy schedules, Riggle valued the property in issue at $227,854, encumbered by a secured debt of $315,303. His amended schedule included "potential claims against any and all entities ... claiming to have an interest, secured and otherwise, over the real property." The potential claims included declaratory relief, state and federal statutory violations, "and all claims having to do with any Note and/or Deeds of Trust which purportedly encumber... or otherwise affecttitle to the real property." In July 2013, Big Blue paid the bankruptcy trustee $5,000 for a trustee's deed to the Riggle property. The deed recited thatthe title conveyed was subject to existing encumbrances and included "allthe estatewhich the debtorhad atthe time of filing of the petition including any amendments in bankruptcy" and "all legal and equitable interests, claims, and rights of the Bankruptcy Estate's

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interest... inthe subject property." Big Blue did not assume Riggle's obligation to paythe note. A "Trustee SettlementAgreement" allegedly executed by Big Blue and the 

### bankruptcy trustee at the time of purchase1 stated, There currently exist uncertainties and disputes as to the accounting, validity, lawfulness, and enforceability of certain Deeds ofTrust as well as disputes and uncertainties as to the authority of the lienholders who may claim the right to enforce those certain Deeds ofTruston the Real Property.

. . . [Pjayment of the encumbrances is being deferred until such time as [Big Blue] can resolve the existing disputes and uncertainties ... so as to ensure any payments due are only received by a party who possesses a lawful, valid, and enforceable security interest against the Real Property. . . .The consideration ftakesl into account . . . the disputes and uncertainties regarding the encumbrances of record and the likely burdensome amount of time, effort, and expense that TBig Bluel will incur in resolving any issues with the condition of the Real Property. . . and the existing disputes and uncertainties regarding the encumbrances.121 On September2, 2013, Big Blue informed Quality by letterthat itdisputed 

### its authority to act as successor trustee and that it objected to the foreclosure sale scheduled for October 18, 2013. The letter stated that as trustee, Quality had a duty ofgood faith and that "[i]twould be ... a breach ofyourduty ofgood faithf ] to complete the currently pending .... Sale without conducting a detailed


### 1 Portions of the alleged agreement were filed for the first time on reconsideration below. There is no signature page inthe record. 

### 2Emphasis added.No. 72623-4-1 / 5
investigation into each ofthe issues described below." The letterthen listed the following alleged irregularities: 1. The Deed of Trust's naming of MERS as Beneficiary is contrary to . . . RCW 61.24.005(2) and is therefore an unenforceable and possibly illegal contract. An unenforceable and possibly illegal contract... is not adequate to initiate or complete a nonjudicial trustee sale under the Washington Deed of Trust Act RCW 61.24 et seq. . . . 2. There have been multiple parties . . .who have been named or claimed to possess or transfer/assign various interests in the . . . Deed ofTrust and/or The Note. a. Homecomings Financial, LLC; This party was the originally named Lenderon The Note and the Deed of Trust; however the branch location listed on the Deed of Trust was not a licensed Branch with the Washington State DepartmentofFinancial Institutions atthe time ofthe origination ofThe Note and Deed of Trust.... b. Mortgage Electronic Registration Systems, Inc. ("MERS"); this entity has been found by the Washington Supreme Court in Bain v. Metropolitan Mortg. Group, Inc., 285 P.3d 34, 175 Wn.2d 83, 89, 95-97,110-112 (Wash. 2012) not to be a lawful Beneficiary of Deeds of Trust in Washington State and as a result [it] possesses no beneficial interestto assign to any other parties, such as the party identified in Item (d) below. c. Deutsche Bank Trust Company Americas, as Trustee . . . ; Based upon . . . preliminary research... the RALI SERIES 2007-QOI TRUST . . . has represented to its investors that the above referenced Deed of Trust and The Note are a part of the corpus of the trust. However, . . . there are required parties who do not exist in the chain of transfers of the Deed of Trust and The Note. As aNo. 72623-4-1 / 6

result [Big Blue] disputes any claim thatthe 2007-QOI Trust is the Owner, Note Holder, or Beneficiary ofthe Deed ofTrust. . . . d. Aurora Bank, FSB; this party has been identified as an assignee that MERS purportedly assigned the "Deed of Trust". . .; however. . . MERS is NOT a lawful beneficiary in Washington State and therefore cannot assign... its "beneficial interest" to Aurora ....

. . .Aurora Bank, FSB [therefore] did not possess the authority to appoint [Quality as successor trustee]. 

### Nor did [it] possess any "beneficial interest"to assign to Nationstar.... As Aurora . . .possessed no interest... to appoint [Quality] as successor trustee, [Quality] did not possess adequate authority to initiate the March 1st, 2013 Trustee Sale ... nor did Nationstar. . . receive any interests or authority adequateto instruct [Quality] to initiate the currently scheduled 10-18-13 Trustee Sale from Aurora .... e. NationstarMortgage, LLC. . . . [A]sfurther described 

### above, Aurora Bank ... did not acquire any valid "beneficial interests" or authority [from] MERS .... [Therefore,] Nationstar. . . received no "beneficial interests" or authority from Aurora Bank 

### Based on these allegations, Big Blue asserted that Quality could not rely
on any beneficiary declaration. Itclaimed that "[t]ocontinueforward with the 10- 18-13 Trustee [sale] without [investigating] would be the opposite of acting in 

### good faith" and that Quality should provide proof that it had been validly appointed and instructed to conduct a sale by the actual beneficiary ofthe deed oftrust.No. 72623-4-1 / 7

Nationstarresponded to Big Blue's letterwith a letterdated September24, 2013. This letter identified Nationstar as the current servicer of the loan and Deutsche Bank as the loan's owner. Italso stated, Please note that Nationstar is the servicer of the loan; and therefore, will be responsible for responding to any concerns regarding the servicing ofthe loan. Servicing matters include, but are not limited to thefollowing:

• Paymentassistance and modifications • Paymentposting

• Validation ofthe debt • Foreclosure proceedings • Paymentadjustments As such, please direct any communication related to these matters to Nationstar. On October 10, 2013, eightdays before the pending trustee sale, Big Blue filedthis lawsuitagainst Quality, its sistercompany, and the law firm ofMcCarthy & Holthus LLP. The complaint alleged violations of the DTA and CPA and sought damages and declaratory and/or injunctive relief. The complaint requested an orderdeclaring MERS an unlawful beneficiary and further declaring void or voidable MERS' assignment to Aurora, Aurora's appointment of Quality
as trustee, andAurora's assignmentofthe deed oftrustto Nationstar. In December 2013, McCarthy & Holthus moved to dismiss the claims against itunderCR 12(b)(6). The courtdenied the motion "becausethe pleading did state a claim . . .that the law firm owned, managed or controlled the foreclosure trustee, and acted in concertwith the foreclosure trustee."No. 72623-4-1 / 8



### In March 2014, McCarthy & Holthus moved for summaryjudgment. Big Blue opposed the motion and asked for a continuance to complete discovery. The court denied the continuance and granted summary judgment dismissing McCarthy &Holthus. InAugust 2014, the remaining defendants moved for summaryjudgment. Atthe start ofthe hearing on the motion, the court stated, "[M]y hope is thatwe'll 

### talk aboutwhether or not Big Blue . . .suffered some type of injury. And if so, if there's anything that [Quality] did that caused that injury." Defendants' counsel argued there was no evidence of injury to Big Blue. Counsel noted that Big Blue 

### bought the property in foreclosure status, the trustee issued no notices of sale afterBig Blue purchasedthe property, and thetrustee canceledthepending sale. Counsel asserted that any injury suffered by Big Blue was traceable to its purchase of a propertyinforeclosure status, not tothe actions ofdefendants. With respect to Riggle's legal claims against defendants that Big Blue claimed it purchased, defendants' counsel argued the record included no evidence that the defendants' actions caused Riggle any injury. Big Blue countered thatboth Riggle and Big Blue were injured bywrongful foreclosure and
a cloud on theirtitle. Ingranting summaryjudgment, the court stated inpertinent part, [T]he Court concludes that the plaintiff lacks standing to pursue claims—eitherits own orthose that David Riggle orthe bankruptcy
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### trustee forthe Riggleestate may have had—undereitherthe Deed of Trust Act orthe Consumer Protection Act. There is a complete 

### absence ofevidence that any ofthese entities suffered an injury or that a defendant was the cause of such injury. The DOTA is 

### intended to protect "borrowers" and the CPA to protect 

### "consumers;" the plaintiffis neither ofthese. Finally, regardless of 

### plaintiff's allegations of irregularities in the appointment of a successor trustee, at present, there is no pending sale to be enjoined. 

### Big Blueappealed. On October 16, 2015, while this appeal was pending, the propertywas sold at atrustee's saleto Deutsche Bank. STANDARD OF REVIEW 

### We review a summary judgment order de novo, engaging in the same 

### inquiry as the trial court.3 We view the facts and all reasonable inferences 

### therefrom in the light most favorable to the nonmoving party.4 Summary judgment is proper ifthere are no genuine issues of material fact and the moving 

### party isentitledto judgment as a matter oflaw.5 Mere allegations orconclusory statements of fact unsupported by evidence are not sufficient to establish a 

### genuine issue offact.6 Nor may the nonmoving party rely on speculation or

3Lvbbertv. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000). 4 Lvbbert, 141 Wn.2d at 34. 5 Lvbbert, 141 Wn.2dat34. 6 Baldwin v. Sisters of Providence in Wash., Inc., 112 Wn.2d 127, 132, 769 P.2d 298 (1989). -9-No. 72623-4-1/10 

### argumentative assertions that unresolved factual issues remain.7 We may uphold asummaryjudgmenton anygroundsupportedbytherecord.8 We review a decision to deny a continuance for a manifest abuse of discretion.9 "In deciding a motion to continue, thetrial court takes intoaccounta 

### number of factors, including diligence, due process, the need for an orderly procedure, the possible effect on the trial, and whether priorcontinuances were 

### granted."10 To establish an abuse of discretion for denial of a continuance, an 

### appellant must show that he or she has been prejudiced.11 When, as here, a party seeks a continuance under CR 56(f), it must provide an affidavit stating what evidence itseeks and how this evidence will raise an issue ofmaterial fact 

### precluding summaryjudgment.12 ANALYSIS 

### Big Blue first contends the court abused its discretion in denying Big Blue's motion for a continuance to conduct further discovery about the 

### relationship between Quality and its lawfirm, McCarthy & Holthus. Wedisagree.

7 Seven Gables Corp. v. MGM/UA Entm't Co., 106Wn.2d 1, 13,721 P.2d 1 (1986). 8 Rainier View Court Homeowners Ass'n v. Zenker, 157 Wn. App. 710, 723, 238P.3d 1217(2010). 

### 9 In re Dependency ofV.R.R.. 134 Wn. App. 573, 580-81, 141 P.3d 85 (2006).10V.R.R., 134Wn. App. at581. 11 State v. Deskins, 180Wn.2d 68, 82, 322 P.3d 780 (2014). 

### 12 Durand v. HIMCCorp., 151 Wn. App. 818, 828, 214 P.3d 189 (2009). -10-No. 72623-4-1 /11



### Atthe hearing on the motions for summaryjudgment, Big Blue's counsel claimed that she needed a continuanceto explore the interrelationship ofthe law firm and Quality. She noted that the discovery cutoffwas still six months away and that they were "still going through thousands of pages of discovery 

### responses" and other information. Inan affidavit, counsel recited the complaint's 

### allegations and stated, "Plaintiffbelievesthatthere may be information from M&H that would affect the outcome of this CR 56 motion." Counsel did not specify what that evidence was. Defendants' counsel noted in his briefing that the case had been open for almost a year. At the hearing, he pointed out that Big Blue had completed 

### discovery on the otherdefendants during thattime and that, in any event, there was "no legal mechanism by which they [could] reach the firm" and hold it liable for any actions ofthetrustee. Indenying a continuance, the court stated, Ithink I'm starting to geta sense ofthe distinction here betweenthe LLP on the one hand, and Mr. McCarthy and Mr. Holthus perhaps on the other hand. The named Defendant in this case, along with QLS, is the LLP ofthe law firm, which apparently has appeared as counsel for QLS repeatedly. Ithink that's a separate and distinct question from the assertion that maybe Mr. McCarthy and Mr. Holthus may have had some role in owning, operating, or having control over [Q]uality .... The motion [to dismiss the claims against the LLP] was properly noted .... There isn't any real opposition to it, otherthan the request for postponement of what I think is the inevitable conclusion, which is to dismiss the lawfirm from this action. Therejust does not seem to be the evidentiary basis at this point in supportfor the naming ofthe LLP, the law firm, as an entity, -11-No. 72623-4-1/12 

### having ownership, management or control over the foreclosure trustee. Isimply don't see itas far as the available evidence at this point, nor does itseem that that is forthcoming, ifthe Court wereto postponethe motion today. So I'll go ahead and sign the Order. 

### Big Blue fails to demonstrate that the court abused its discretion. Its 

### briefing on appeal provides no meaningful analysis of the court's reasons for denying the continuance. And its counsel's affidavit supporting the requested continuance lacks an adequate description ofthe evidence Big Blue expected to 

### discoverand its materiality. Considering the relevantfactors setforth above and on this briefing, we cannotsaythe courtabused itsdiscretion. 

### Big Blue also contends the court erred in dismissing its claims for damages under the DTA and CPA and for failing to grant it declaratory or injunctive relief. Again, we disagree. Violations ofthe Deeds ofTrustAct/ Declaratoryand Injunctive Relief



### An action for damages based on alleged violations ofthe DTAcannot be maintained in the absence of a foreclosure sale.13 Because no sale had 

### occurred at the time ofsummaryjudgment, the trialcourt properly dismissed Big Blue's claims underthe DTA. And in light ofthe recent sale ofthe property, Big Blue's claimsfor declaratory and injunctive reliefare moot.

13 Frias v. Asset Foreclosure Servs., Inc., 181 Wn.2d 412, 429, 334 P.3d 529 (2014). -12-No. 72623-4-1/13

Violations ofthe ConsumerProtection Act 

### Although Big Blue cannot bring a claim for damages under the DTA 

### without a foreclosure sale, it may bring CPA claims forviolations of the DTA.14 To prevail on a CPA claim, the plaintiffmust establish "(1) [an] unfair ordeceptive 

### act or practice; (2) occurring intrade orcommerce; (3) publicinterestimpact; (4) 

### injurytoplaintiffin his or her business orproperty; (5)causation."15 "[W]hethera particular action gives rise to a Consumer Protection Actviolation is reviewable as a question oflaw."16 

### Big Blue's complaint alleges unfair or deceptive acts arising from violations ofthe DTA, inaccuracies or misrepresentations inthe note and deed of 

### trust, the designation of MERS as the beneficiary in the deed of trust, the 

### invalidity of MERS' subsequent assignment to Nationstar, the invalidity of Nationstar's appointment of Qualityas trustee, and Quality's violation of its duty 

### of good faith by failing to investigate these and other irregularities Big Blue brought to its attention in its September 2013 letter. Big Blue contends these unfair or deceptive acts injured its business or property because they had 

### "negative ramifications on the reliability, insurability, and marketability" of thetitle.
14 Lyons v. U.S. Bank NA, 181 Wn.2d 775, 784, 336 P.3d 1142 (2014); Truiillov. Nw. Tr. Servs.. Inc., 183Wn.2d 820, 834, 355 P.3d 1100 (2015). 15 Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co.. 105 Wn.2d 778, 780, 719 P.2d 531 (1986). 16 Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133, 150, 930 P.2d 288 (1997). -13-No. 72623-4-1 /14

Italso claims ittook "significant time away from its business pursuits, incurred 

### investigative expenses, and . . .attorneyfees" inorder"toclearup theconfusion" regarding which entity "was the actual Note Holder. . . and therefore possessed the ability to clear title to The Property." Big Blue also seeks to recover for injuries Riggle allegedly suffered from these acts before Big Blue purchased the property. 

### Big Blue has not demonstrated any issue offact as to whetherthe alleged unfair or deceptive acts caused Riggle or Big Blue any injury. To prove 

### causation, the "plaintiff must establish that, but for the defendant's unfair or 

### deceptive practice, the plaintiffwould not have suffered an injury."17 Big Blue cannot dispute that Riggle failed to pay the note as required. Nothing in Big Blue's pleadings demonstrated an injury to Riggle's business or property caused 

### by the alleged violations ofthe DTA or other irregularities. The record contains
no declaration from Riggle or otherevidence that he failed to make his payments 

### because ofthe alleged unfair or deceptive acts. Itcontains no evidence that he
was unable to determine whom he was supposed to make his payments to or that anything other than his financial straits caused his default and subsequent

17 Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 84, 170 P.3d 10 (2007). -14-No. 72623-4-1/15 

### bankruptcy. Big Blue thus failed todemonstrate a genuine issue of fact showing 

### the alleged CPAviolations causedanyinjurytoRiggle.18 Norhas Big Bluedemonstrated any issue of fact astowhetherthe alleged CPA violations caused Big Blue any injury after itpurchased the property. Big Blue admits that it purchased the property for a nominal sum after all four foreclosure notices were issued. In a similarsituation, an Oregon court held that 

### an entity named Big Blue Capital Partners LLC "did not suffer an injury that is 

### fairly traceable to the challenged actions ofdefendants" and "to the extentthat 

### [Big Blue] suffered an injury, it was due to [Big Blue's] own actions in purchasing 

### thePropertyafternon-judicialforeclosure proceedings had beencommenced."19 The same is true here. 

### Big Bluepurchased the property knowing that Riggle had defaulted, that the trustee had recorded notices of foreclosure, and that Riggle valued the 18 See, e.g.. Babrauskas v. Paramount Eguitv Mortg., No. C13-0494 RSL, 

### 2013 WL5743903, at *4(W.D. Wash. Oct. 23, 2013) ("Any damage to plaintiffs credit, cloud on his title, or monetaryeffectof the threatofforeclosure cannotbe laid at MERS' door.... Plaintiff has not alleged facts raising the plausible 

### inferencethat, but for MERS' identification as the beneficiary on the deed oftrust 

### and its ineffective assignments of interest, plaintiffwould not have suffered the adverse impacts of which he complains. Rather, plaintiff's failure to meet his debt obligations is the 'but for'cause of the default, the threatof foreclosure, any adverse impact on his credit, and the clouded title."); McCrorev v. Fed. Nat'l Mortg. Ass'n. No. C12-1630 RSL, 2013 WL 681208, at *4 (W.D. Wash. Feb. 25, 

### 2013) (finding no injury underthe CPAbecause "itwas [plaintiffs'] failure to meet their debt obligations that led to a default, the destruction of credit, and the foreclosure"). 19 Big Blue Capital Partners. LLC v. Recontrust Co., No. 6:11-CV-06368- AA, 2012 WL 1605784, at *5 (D. Or. May 4, 2012). -15-No. 72623-4-1/16


### property at roughly $100,000 less than the debt on the loan. Moreover, Big Blue's alleged settlement agreement with the bankruptcy trustee states that Big Blue had investigated, and was aware of, the alleged title and foreclosure 

### irregularities when itpurchased the property. That agreement also states that the price Big Blue paid took into account those irregularities as well as the anticipated costs of rectifying orclarifying them. Big Bluewas plainly not a victim of unfairacts ordeception. Any injury to Big Blue arising fromthese known facts 

### was self-inflicted and does notsupporta CPAclaim.20 Finally, Big Blueclaims itwas injured bythetrustee's failure to investigate and clarifythe uncertainties Big Blue identified in its September 2013 letter to 

### Quality. A violation of a trustee's duty of good faith may be actionable as a violation ofthe CPA.21 Although a trustee may rely on the representations in a beneficiary declaration and "does notneedto summarilyaccepta borrower's side of the story or instantly submit to a borrower's demands," it has a duty to 

### investigate if "there is an indication that the beneficiary declaration might be ineffective" or itknows about "conflicting information regarding [its] right to initiate foreclosure."22

20 Big Blue Capital. 2012 WL 1605784, at *5. 21 Lyons. 181 Wn.2d at 786-89. 

### 22 Lyons, 181 Wn.2dat787. -16-No. 72623-4-1/17
Assuming Big Blue's September2013 lettertriggered a dutyto investigate, Big Blue has not identified any genuine issue of fact as to whether the trustee breached that duty. Three weeks after Big Blue's letter, Nationstar responded and informed Big Blue that it was the current servicer of the loan and that Deutsche Bank was the loan's owner. Because the deed oftrust provided that loan payments could be made to the loan servicer and because Nationstar's letter stated that it was the entity responsible for "Payment assistance and modifications," "Validation ofthe debt," "Foreclosure proceedings," and "Payment adjustments," Big Blue had the information it needed to proceed with any negotiations about the debt or other efforts to clear title. In addition, Quality's cancellation ofthe sale in response to Big Blue's letterfurther demonstrated its good faith. And even if Quality breached its duty to investigate, Big Blue has not shown any issue of fact as to whether the breach injured Big Blue. As noted above, Big Blue promptly received information from Nationstar that allowed it to
move forward with its plan to clear title. Cancellation of the sale also removed the most immediate impedimentto Big Blue's plans and afforded itcontinued use of the property. To the extent uncertainties remained after Nationstar's response, Big Blue was aware of these uncertainties when it purchased the property and could have attempted to resolve them by contacting Nationstar. Big

-17-No. 72623-4-1/18

Blue chose to file suit instead. Filing a CPA action does not, however, show 

### injury underthe CPA.23 Because Big Blue has notprevailed on appeal, it is not entitled to attorney fees. Affirmed.

rs>

o OS



### 23 Sign-O-Lite Signs. Inc. v. DeLaurenti Florists. Inc.. 64 Wn. App. 553, 564, 825 P.2d 714 (1992) ("having to prosecute" a CPA claim "is insufficient to show injury").
-18-