Source: http://docs.justia.com/cases/federal/district-courts/washington/wawdce/3:2011cv05635/177957/33/
Timestamp: 2014-12-18 11:32:12
Document Index: 754303198

Matched Legal Cases: ['§ 1446', '§ 1638', '§ 1640', '§ 2614', '§ 876', '§ 876', '§ 1635']

ORDER granting 8 Defendant NW Trustee Services' Motion to Dismiss; granting 20 Hyperion Capital Group's Motion to Dismiss; and granting 26 Bank of America, MERS, and Wells Fargo's Motion to Dismiss for Brashkis et al v. Hyperion Capital Group, LLC et al :: Justia Dockets & Filings
› Brashkis et al v. Hyperion Capital Group, LLC et al
VERA BRASHKIS and DV&I SERVICES,
No. 3:11-cv-05635 RBL
[Dkt. #s 8, 20, 26]
HYPERION CAPITAL GROUP, LLC;
BANK OF AMERICA, N.A.; WELLS
FARGO BANK, N.A.; and DOES 1–20,
THIS MATTER comes before the Court upon Defendants’ Motions to Dismiss under
Rule 12(b)(6) for failure to state a claim upon which relief can be granted. [Dkt. #s 8, 20, 26].
This case arises from a home mortgage agreement between Plaintiff Vera Brashkis and
Defendant Hyperion Capital Group, LLC. When Plaintiff defaulted on her mortgage, the
property at issue was repossessed. Plaintiff asserts a variety of claims against Defendants, all
based upon her assertion that they acted deceptively and fraudulently throughout the loan
The Court has reviewed the materials submitted in support of and in opposition to the
Motions. For the reasons below, the Defendants’ Motions to Dismiss are GRANTED.
1. Brashkis Property
On October 24, 2006, Plaintiff Vera Brashkis1 executed and delivered a $500,000
promissory note to Defendant Hyperion Capital Group, LLC. To secure repayment of the Note,
Brashkis executed and delivered to Hyperion a deed of trust on her Washougal, Washington
Property. The Deed was recorded on October 31, 2006, and identified Defendant Mortgage
Electronic Registration Systems, Inc. (MERS) as the nominee and beneficiary. Hyperion
assigned beneficial interest under the Deed to Defendant Bank of America, N.A. The
assignment of deed of trust was recorded on April 28, 2008. Bank of America then appointed
Defendant Northwest Trustee Services, Inc. (NWTS) as successor trustee. The appointment of
successor trustee was also recorded on April 28, 2008.
Brashkis subsequently failed to make required mortgage payments and defaulted on the
Note. Bank of America pursued foreclosure under the Deed’s power of sale provision. As
trustee, NWTS conducted a foreclosure sale on July 15, 2011. There were no bids, and the
Brashkis Property reverted to beneficiary Bank of America. The Bank received a trustee’s deed,
which was recorded on July 25, 2011.
Plaintiffs filed this suit in Clark County Superior Court on July 22, 2011, against
Hyperion, MERS, NWTS, Bank of America, Wells Fargo, and twenty unnamed officers.
Plaintiffs allege that Defendants acted fraudulently and deceptively throughout the mortgage
process. Defendant Wells Fargo Bank removed the case to Federal Court on federal question
grounds under 28 U.S.C. § 1446. [Dkt. #1]. Plaintiffs seek money damages as well as
declaratory and injunctive relief. Plaintiffs claim fraud, unfair business practices under
Washington’s Consumer Protection Act (RCW 19.86), prohibited practices under the
Washington’s Escrow Agent Registration Act (RCW 18.44), claims that Defendants aided and
abetted each other in fraudulent activities, claims quiet title, and slander of title. Defendants
filed Motions to Dismiss all claims [Dkt. #s 8, 20, 26].
Brashkis alleges that DV&I Services, also involved in this case as a Plaintiff, is the current lawful owner of the
subject Property pursuant to a quitclaim deed executed by Brashkis.
theory or absence of sufficient facts alleged under a cognizable legal theory. Balistreri v.
Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff’s complaint must allege
facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 129 S. Ct. 1937,
1949 (2009). A claim has “facial plausibility” when the party seeking relief “pleads factual
misconduct alleged.” Id. Although the Court must accept as true the Complaint’s well-pled facts,
[Rule 12(b)(6)] motion. Vasquez v. L. A. County, 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell
v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff’s obligation to
and a formulaic recitation of the elements of a cause of action will not do. Factual allegations
must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007) (citations and footnote omitted). This requires a plaintiff to plead
“more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S. Ct. at
1949 (citing Twombly).
Brashkis claims fraud against all Defendants. She claims Defendants falsely represented
costs, fees, commissions, and risks associated with the loan. Her fraud claims hinge on
Hyperion’s and MERS’ alleged failures of duties under the federal Truth in Lending Act (TILA)
(15 U.S.C. § 1638) and the federal Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. §
Plaintiffs’ TILA and RESPA claims are time-barred. TILA imposes a one-year statute of
limitations on damages claims. 15 U.S.C. § 1640(e). Plaintiffs alleged violations stem from the
loan application process. The limitations period begins to run when loan documents are signed.
See Meyer v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir. 2003). Brashkis signed the
documents in October 2006. The one-year TILA limitations period has elapsed.
RESPA violations are also subject to limitations periods. An action may be brought
“within 3 years in the case of a violation of section 2605 of this title and 1 year in the case of a
violation of section 2607 or 2608 of this title from the date of the occurrence of the violation . . . .”
12 U.S.C. § 2614. Sections 2605, 2607, and 2608 of the Act are all applicable to the fraud
allegations here. Any alleged violations necessarily occurred at the time the loan was signed.
Both the one- and three-year limitations periods have run. The fraud claim is time-barred.
Defendants Motions to Dismiss Plaintiffs’ fraud claims are GRANTED.
3. Consumer Protection Act Claim
Plaintiffs claim Defendants used unfair business practices in violation of Washington’s
Consumer Protection Act (RCW 19.86). Plaintiffs claim Defendants “rushed” Brashkis through
the loan and escrow process, made the loan without regard to Brashkis’ ability to meet the loan’s
terms, and violated TILA and RESPA. This claim is also time-barred. Section 19.86.090
provides a four-year limitations period from the time the cause of action accrues.
Brashkis took no action within the limitations period after signing loan documents. The
limitations period has run. If Brashkis also means to support her claim with the alleged TILA
and RESPA violations discussed above, those alleged violations are unhelpful, because they are
independently time-barred. Defendants’ Motions to Dismiss Plaintiff’s CPA claim are
Escrow Agent Restriction Act Claim
Plaintiffs claim Defendants engaged in prohibited practices in violation of Washington’s
Escrow Agent Restriction Act (RCW 18.44). Section 18.44.301 identifies prohibited practices
for “any escrow agent, controlling person, officer, designated escrow officer, independent
contractor, employee of an escrow business, or other person subject to this chapter.” Prohibited
practices under the EARA include employing any means to defraud or mislead borrowers,
engaging in any unfair or deceptive practice toward any person, and obtaining property through
fraud or misrepresentation. Plaintiffs allege Defendants falsely provided and ratified notarized
documents, “rushed” Brashkis through the loan process, and violated RESPA.
Plaintiffs simply fail to allege any fact placing Defendants under the regulatory ambit of
the EARA. Plaintiffs have not asserted that Defendants are escrow agents or any other of the
identified persons regulated under the statute. Defendants point out that the state database of
escrow agents and officers subject to the Act does not include any of their names. This claim is
improper, because Plaintiffs have not alleged any fact to support the application of this statute to
Defendants. Defendants’ Motions to Dismiss Plaintiffs’ EARA claim are GRANTED.
5. Aiding and Abetting Claim
Plaintiffs claim Defendants aided and abetted each other in deceptive and fraudulent acts.
Washington recognizes a cause of action for aiding and abetting fraud in some circumstances.
Wash. Constr., Inc. v. Sterling Sav. Bank, 163 Wash. App. 1027, 2011 WL 4043579, at *10 n.8
(2011) (citing Restatement (Second) of Torts § 876 (1977)). To succeed on an aiding and
abetting claim, a plaintiff must show that a defendant “knows that the other’s conduct constitutes
a breach of duty and gives substantial assistance or encouragement to the other.” Restatement
(Second) of Torts § 876(b). This claim requires a showing of agreement and concerted action
among Defendants in committing the fraud. See Martin v. Abbott Labs., 102 Wash.2d 581, 597–
599 (1984).
The fraud claim underlying this aiding and abetting claim has been dismissed. Supra at
3–4. The aiding and abetting claim cannot proceed when the fraud claim does not. Furthermore,
Plaintiffs fail to allege any fact establishing Defendants’ knowledge of and assistance with
deceptive or fraudulent conduct. Plaintiffs merely allege that Defendants did know and did
assist. These legal conclusions are not factual allegations and insufficient to state a claim on
which relief can be granted. Defendants’ Motions to Dismiss Plaintiffs’ aiding and abetting
6. Injunctive Relief Claim
Plaintiffs seek injunctive relief barring collection of Brashkis’ debt, creation of a lien on
the Property, and foreclosure of the Property. The collection of debt via foreclosure sale already
occurred in July 2011. Plaintiffs claim for injunctive relief is moot. Defendants’ Motions to
Dismiss Plaintiffs’ request for injunctive relief are GRANTED.
7. Loan Rescission
Defendants ascertain that Plaintiff seeks rescission of her loan agreement under TILA.
The purpose of TILA rescission is to return parties to the status quo ante. Yamamoto v. Bank of
N.Y., 329 F.3d 1167, 1171 (9th Cir. 2003). Under TILA, a borrower will return money or
property following rescission (15 U.S.C. § 1635(b)), but courts have discretion to require tender
of advanced funds prior to rescission of a loan agreement. See Yamamoto, 329 F.3d at 1170.
Where a borrower has not alleged an ability to tender such funds, this Court has been unwilling
to allow TILA rescission to proceed. See, e.g., Moore v. ING Bank, FSB, 2011 WL 1832797, at
*3 (W.D. Wash. May 13, 2011) (holding a TILA rescission claim barred because of a borrower’s
failure to allege ability to tender). Brashkis has not alleged an ability to return funds advanced
Additionally, the TILA limitations period has run, barring Plaintiff from rescinding the
loan under that statute. To the extent Brashkis seeks rescission of her loan agreement, her
request fails, and Defendants Motions to Dismiss any rescission claim are GRANTED.
8. Declaratory Relief Claim
Plaintiffs seek declaratory relief. DV&I requests a declaration that it holds clear title to
the Property, and Brashkis requests a declaration that she does not owe any money pursuant to
her loan. Plaintiffs also seek a declaration that various documents filed with Clark County are
invalid. These requests for injunctive relief are thoroughly unsupported by factual allegations.
DV&I is alleged to hold a quitclaim deed to the Property. A quitclaim deed does not in and of
itself bestow title. It simply confers on grantee whatever interest grantor has in the Property at
Plaintiffs have alleged no facts to support DV&I’s assertion that it holds title, since
Brashkis lost title to the property upon repossession by Bank of America. Brashkis’ request for
declaratory relief is similarly unsupported by factual allegations, as is the request for a
declaration of document invalidity. Defendants’ Motions to Dismiss Plaintiffs’ request for
declaratory relief are GRANTED.
9. Quiet Title Claim
Plaintiff DV&I seeks quiet title of the Property. A quiet title action is designed to resolve
competing claims of ownership or the right of property possession. See Kobza v. Tripp, 106
Wash. App. 90, 95 (2001). Under RCW 7.28.230(1), deeds of trust and mortgages create only a
secured lien on real property. They do not convey ownership or a right to possess. None of the
Defendants except Bank of America have a current claim of ownership. Therefore Defendants,
other than Bank of America, are not the correct parties to engage in such an action.
With respect to Bank of America, Plaintiff fails to state a claim. Bank of America holds
a trustee’s deed to the Property following the foreclosure sale. The Deed of Trust Act provides
that “after a trustee’s sale, no person shall have any right, by statute or otherwise, to redeem the
property sold at the trustee’s sale.” RCW 61.24.050. Washington law requires that a trustee’s
deed be delivered and sale finalized “unless the sale itself was void due to a procedural
irregularity that defeated the trustee’s authority to sell the property.” Udall v. T.D. Escrow
Servs., Inc., 159 Wash.2d 903, 911 (2007). No such procedural irregularities are alleged here.
Plaintiff’s quiet title claim depends upon loan rescission this Court refused to grant.
Supra at 6. Furthermore, Plaintiff cannot rightly proceed on a quiet title claim when all the bases
for it have been previously dismissed in this Order. The quiet title claim against Bank of
America therefore fails. Defendants’ Motions to Dismiss Plaintiff’s quiet title claim are
10. Slander of Title Claim
Plaintiffs assert a slander of title claim against all Defendants. Slander of title is the
employment of false words regarding a pending sale of property, published maliciously with the
purpose of defeating plaintiff’s title. See Rogvig v. Douglas , 123 Wash.2d 854, 859 (1994).
The slander must result in plaintiff’s financial loss. Id.
Plaintiffs fail to allege any use of false words by Defendants. Plaintiffs fail to allege any
malicious publication. Plaintiffs fail to allege a pending sale or purchase of property at issue.
The slander of title claim seems to be based on Plaintiffs’ allegation that Defendants did not
properly file or record various documents. Defendants’ alleged omission is insufficient to
support a slander of title claim. Defendants’ Motions to Dismiss Plaintiffs’ slander of title claim
Defendants’ Motions to Dismiss all claims are GRANTED.