Opinion ID: 2828899
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Heading Rank: 2

Heading: DTA Analysis

Text: The first question that we must address is whether NWTS violated the DTA by relying on a beneficiary declaration stating that Wells Fargo is the actual holder of the promissory note or other obligation evidencing the above-referenced loan or 9 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 has requisite authority under RCW 62A.3-301 to enforce said obligation. CP at 36. Trujillo claims that NWTS's decision to rely on this declaration was unlawful. Suppl. Br. ofPet'r at 17-18; CP at 89-90. She argues that the trustee must have proof that the beneficiary is the owner of the note before sending a notice of trustee sale, and that NWTS knew Wells Fargo did not own the note before sending that notice. Pet. for Review at 9; CP at 90. She also asserts that the beneficiary declaration here did not authorize NWTS to record the notice of trustee's sale because it contained the unauthorized additional [or] language, which is different from the language of the second sentence of RCW 61.24.030(7)(a) and which this court declared improper in Lyons. Suppl. Br. ofPet'r at 17; CP at 88. We agree with Trujillo for the most part. The DTA requires a trustee to have proof that the beneficiary actually owns the note on which the trustee is foreclosing. Lyons, 181 Wn.2d at 789 (citing Bain v. Metro. Mortg. Grp. Inc., 175 Wn.2d 83, 102, 111, 285 P.3d 34 (2012)). But the DTA also says, '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' of this requirement. !d. at 789-90 (emphasis added) (alteration in original) (quoting RCW 61.24.030(7)(a)). Thus, a trustee is entitled to rely on such a beneficiary declaration when initiating a trustee's sale, unless the trustee violated its good faith duty. !d. at 790 (citing RCW 10 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 61.24.030(7)(b)). In this case, however, we don't have such a declaration. We have a declaration stating that Wells Fargo could be the actual holder or it could be something else. The question is whether reliance on that ambiguous declaration suffices. 8 Our decision in Lyons-which did not issue until after the Court of Appeals resolved Trujillo's case-answers that question. In Lyons, a case decided on summary judgment, we considered the validity of a beneficiary declaration containing the same or language. 9 We ruled that it did not satisfy RCW 61.24.030(7)(a). Lyons, 181 Wn.2d at 791. We explained, On its face, it is ambiguous whether the declaration proves Wells Fargo is the holder or whether Wells Fargo is a nonholder in possession or person not in possession who is entitled to enforce the provision under RCW 62A.3-301. Id. Lyons controls the outcome in this case. Here, as in Lyons, the language in Wells Fargo's declaration is ambiguous about whether Wells Fargo actually held the 8 Thus, we do not address whether RCW 61.24.030(7)(a) allows a trustee to rely on an unambiguous declaration stating that the beneficiary is the actual holder of the note, even though the owner is a different party. That issue is raised in a pending case, and we express no opinion on it here. 9 The beneficiary declaration at issue in Lyons similarly stated, 'Wells Fargo Bank, NA, is the actual holder of the promissory note or other obligation evidencing the abovereferenced loan or has requisite authority under RCW 62A.3-301 to enforce said obligation.' Lyons, 181 Wn.2d at 780 (emphasis added). 11 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 note when it initiated the foreclosure. CP at 36. This ambiguity indicated that the declaration might be ineffective. Lyons, 181 Wn.2d at 790. Because this declaration fails to satisfy RCW 61.24.030(7)(a), NWTS could not lawfully rely on it to prove that Wells Fargo was an owner of the note. Under Lyons, because Trujillo alleges that NWTS deferred to this ambiguous declaration to initiate foreclosure on her home, she alleges facts sufficient to prove a violation of the DTA. Id. at 790; see also Beaton v. JPMorgan Chase Bank NA, No. C11-0872 RAJ, 2013 WL 1282225, at  (W.D. Wash. Mar. 26, 2013) (court order). We therefore reverse the Court of Appeals decision that Trujillo failed to allege a violation of the DTA. On remand, Trujillo must have the opportunity to prove that NWTS actually relied on the impermissibly ambiguous declaration as a basis for issuing the notice of trustee's sale. 10 10 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. See Br. of Amicus Curiae of Att'y Gen. of State of Wash. at 10; RCW 61.24.030(7)(a) ([B]efore 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. (emphasis added)). A court must assess the propriety of the trustee's conduct based upon the trustee's evidence and investigation at that time. 12 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 III. The Alleged Violation of the DTA Is Sufficient To Support Trujillo's CPA Claim A. CPA Statutory Framework Trujillo cannot bring a claim for damages under the DTA absent a completed trustee's sale of her property. Frias v. Asset Foreclosure Servs., Inc., 181 Wn.2d 412, 428-30, 334 P.3d 529 (2014); Lyons, 181 Wn.2d at 784. She may, however, bring a CPA claim based on a defendant's wrongful conduct during a nonjudicial foreclosure process, even without a completed sale. See Frias, 181 Wn.2d at 42930; Bain, 175 Wn.2d at 119. 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 (1) 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. Klem v. Wash. Mut. Bank, 176 Wn.2d 771, 782, 295 P.3d 1179 (2013) (quoting Hangman Ridge Training Stables, Inc. v. Safeco Titlelns. Co., 105 Wn.2d 778,780, 719P.2d531 (1986)). B. Analysis Trujillo alleges that NWTS violated the CPA. Turning to the first element of a CPA claim, she alleges that NWTS 's attempted foreclosure was unfair or 13 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 deceptive. CP at 93. 11 Whether an act is unfair or deceptive is aquestion of law. Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133, 150, 930 P.2d 288 ( 1997). A plaintiff need not show the act in question was intended to deceive, only that it had the capacity to deceive a substantial portion of the public. Panag v. Farmers Ins. Co. ofWash., 166 Wn.2d27, 47,204 P.3d 885 (2009) (citing Leingang, 131 Wn.2d at 150). Following Lyons, NWTS's alleged conduct had the capacity to deceive. It therefore supports a CPA claim. See Lyons, 181 Wn.2d at 785. To satisfy the second and third elements of her CPA claim-that NWTS' s acts occurred in trade or commerce and that they affected the public interest-Trujillo alleges, Wells [Fargo] makes these unfounded claims to foreclose on defaulting borrowers as a routine part of its foreclosure activities on behalf of Fannie Mae. Its foreclosure activities are conducted in the course of trade and commerce and certainly impact the public interest. CP at 93. In a private action, a plaintiff can establish that the lawsuit would serve the public interest by showing a likelihood that other plaintiffs have been or will be injured in the same fashion. Michael v. Mosquera-Lacy, 165 Wn.2d 595, 604-05, 200 P.3d 695 (2009) (quoting Hangman 11 None ofthe acts alleged in Trujillo's complaint constitute per se violations ofthe DTA that would automatically satisfy the first element of a CPA claim. RCW 61.24.135. 14 Tnljillo v. Nw Tr. Servs., Inc., No. 90509-6 Ridge, 105 Wn.2d at 790). The court considers four factors to assess the public interest element when a complaint involves a private dispute: (1) whether the defendant committed the alleged acts in the course of his/her business, (2) whether the defendant advertised to the public in general, (3) whether the defendant actively solicited this particular plaintiff, and (4) whether the plaintiff and defendant have unequal bargaining positions. I d. (citing Hangman Ridge, 105 Wn.2d at 791 ). The plaintiff need not establish all of these factors, and none is dispositive. Id. Trujillo's allegations satisfy the second and third elements because they relate to the sale of property, RCW 19.86.010(2), and they state that other plaintiffs have or will likely suffer injury in the same fashion. I d. (citing Hangman Ridge, 105 Wn.2d at 790). 12 To meet the final two elements of her CPA claim-injury and causationTrujillo alleges, [NWTS] is attempting to help Wells [Fargo] sell the Property on 12 As Trujillo points out in support of her argument on this element, numerous lawsuits have involved similar beneficiary declarations. See, e.g., Beaton, 2013 WL 1282225, at  (beneficiary declaration stated that JPMorgan Chase Bank NA 'is the actual holder ... or has requisite authority under RCW 62A.3-301 ' was insufficient (emphasis omitted)); In re Butler, 512 B.R. 643, 644, 655-56 (Bania. W.D. Wash. 2014) (beneficiary declaration stating that One West Bani< 'is the actual holder of the promissory note ... or has requisite authority under RCW 62A.3-301 to enforce said obligation' was sufficient (quoting RCW 61.24.030(7)(a))); Mulcahy v. Fed. Home Loan Mortg. Corp., No. Cl3-1227RSL, 2014 WL 1320144, at  (W.D. Wash. Mar. 28, 2014) (declaration stating that Wells Fargo 'is the actual holder ... or has requisite authority under RCW 62A.3-301 'was sufficient); Mickelson v. Chase Home Fin. LLC, 579 F. App'x 598, 601 (9th Cir. 2014) (Mem. Op.) (beneficiary declaration stated that Chase Home Finance LLC is the actual holder or has requisite authority under RCW 62A.3-301 was sufficient). 15 Tnljillo v. Nw Tr. Servs., Inc., No. 90509-6 the basis that Wells [Fargo] is the Note Holder and beneficiary when [i]t has been shown, beyond reasonable dispute, that it was neither. CP at 93. In contrast, NWTS moved to dismiss, arguing, The Plaintiff does not contend that any action by NWTS causes [sic] or induced her to default on the loan. Nor does Plaintiff assert that no party is entitled to foreclose on the property. CP at 14-15. NWTS concludes, [R]egardless ofNWTS' role as successor trustee under the deed of trust, Plaintiffs property would still be foreclosed upon based on the failure to make payments on the loan. CP at 15. While emotional distress, embarrassment, and inconvenience are not compensable injuries under the CPA, Trujillo does not have to lose her property completely to prove injury. Frias, 181 Wn.2d at 430-31. Trujillo can satisfy the CPA's injury requirement with proof that her property interest or money is diminished as a result of NWTS 's unlawful conduct, even if the expenses incurred by the statutory violation are minimal. Panag, 166 Wn.2d at 57 (quoting Mason v. Mortg. Am., Inc., 114 Wn.2d 842, 854, 792 P.2d 142 (1990)). Trujillo's investigation expenses and other costs associated with dispelling the uncertainty about who owns the note that NWTS's allegedly deceptive conduct created are therefore sufficient to constitute an injury under the CPA. Br. of Amicus Curiae of 16 Tnljillo v. Nw Tr. Servs., Inc., No. 90509-6 Att'y Gen. of State of Wash. at 14-15; McDonald v. One West Bank} FSB, 929 F. Supp. 2d 1079, 1098 (W.D. Wash. 2013) (citing Panag, 166 Wn.2d at 62-63). IV. The Alleged DTA Violation Does Not Support a Criminal Profiteering Claim A. Criminal Profiteering Statutory Framework Trujillo also alleges that NWTS violated the Criminal Profiteering Act. CP at 91-92. Criminal profiteering is defined as commission of specific enumerated felonies for financial gain. RCW 9A.82.010(4). Trujillo alleges violations ofRCW 9A.82.010(4)(e), which defines theft as a predicate criminal profiteering act, and RCW 9A.82.010(4)(s), which defines leading organized crime as a criminal profiteering act. CP at 91-92. But the definition profiteering, alone, is not actionable. Only a violation of RCW 9A.82.100(1)(a) can support a private profiteering action. Assuming that Trujillo actually intended to proceed under that statute, it provides that a person who sustains injury to his or her person, business, or property may sue to recover damages and costs, including reasonable investigative and attorney fees, if the injury is caused by an act of criminal profiteering that is part of a pattern of criminal profiteering activity or by a violation of RCW 9A.82.060, which involves leading organized crime. Winchester v. Stein, 135 Wn.2d 835, 850, 959 P.2d 1077 (1998) (citing RCW 9A.82.1 00(1 )(a)). Trujillo never explains whether she is asserting a claim under the 17 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 pattern-of-profiteering-acts prong ofRCW 9A.82.100(1) or the leading-organizedcrime portion of that statute. B. Analysis Assuming that Trujillo meant to allege a profiteering claim based on leading organized crime, Trujillo would have to establish that NWTS (1) intentionally organized, managed, directed, supervised, or financed (2) three or more persons (3) with the intent to engage in a pattern of criminal profiteering activity. RCW 9A.82.060(1)(a). Trujillo fails to allege such a claim because she does not allege the involvement of three or more persons. Id. Assuming instead that Trujillo intended to allege a profiteering claim based on a pattern of profiteering acts, she would have to establish that NWTS committed an enumerated felony that was part of a pattern of profiteering activity. The statute has a very detailed definition of pattern of criminal profiteering activity. It means, in very general terms, three or more acts of criminal profiteering within a five-year period that have specific similarities or are interrelated with a nexus to the same enterprise. RCW 9A.82.010(12). Enterprise means any individual, sole proprietorship, partnership, corporation, business trust, or other profit or nonprofit legal entity, and includes any union, association, or group of 18 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 individuals associated in fact although not a legal entity, and both illicit and licit enterprises and governmental and nongovernmental entities. RCW 9A.82.010(8). Even if we construe facts alleged throughout the pro se complaint liberally, they are still wanting. In her complaint, Trujillo alleges, Well[s Fargo's] attempt to obtain the Property at the trustee's sale by bidding the amount of Plaintiffs debt obligation when Wells [Fargo] knows it is neither the owner nor the holder of the Note is nothing short of attempted theft. Claiming that it is the Beneficiary and Note holder as the essence of its attempt to obtain the Property means that the attempted theft is an attempt to steal by employing deceptive means. CP at 91. She also alleges, [NWTS] has acted in concert with Wells [Fargo] in Wells [Fargo's] attempt to bring about the sale of the Property. CP at 92. She further alleges, Allowing the servicer to foreclose in its own name, where applicable law permits, is such a normal part of Freddie Mac's [(Federal Home Loan Mortgage Corporation)] foreclosure activity that Freddie Mac has developed standard procedures for using this method to foreclose. ld. And she alleges that Wells Fargo engaged in leading organized crime under RCW 9A.82.060 because Wells [Fargo] has foreclosed on hundreds, if not thousands, of homes in the last five years. Scores of those homes, at least, have been Fannie Mae homes. ld. No Washington case has provided a test to determine whether an enterprise exists. But the Supreme Court has indicated what is required to show an enterprise under the federal RICO statute (Racketeer Influenced and Corrupt Organizations 19 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 Act), 18 U.S.C. § 1964(c). 13 An enterprise is an entity or a group of people associated together for a common purpose of engaging in a course of conduct. United States v. Turkette, 452 U.S. 576, 583, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981 ). A plaintiff can prove the existence of an enterprise with evidence of an ongoing organization, formal or informal, and by evidence · that the various associates function as a continuing unit. !d. 14 Trujillo fails even to identify an enterprise in her complaint. Although she mentions NWTS, Wells Fargo, Freddie Mac, and Fannie Mae, CP at 92, she is not clear about which of these entities, or which combination of them, constitute the enterprise. Given that defect alone, she fails to allege a profiteering claim. V. Trujillo Alleges Insufficient Facts To Prove Intentional Infliction of Emotional Distress Finally, Trujillo claims intentional infliction of emotional distress. CP at 9394. This requires proof of the following elements: '(1) extreme and outrageous conduct, (2) intentional or reckless infliction of emotional distress, and (3) actual 13 We may apply federal case law in this area to interpret the Criminal Profiteering Act. Winchester, 135 Wn.2d at 848. 14 Several United States Courts of Appeals have interpreted Turkette and expanded on what must be shown to prove an enterprise. E.g., United States v. Pelullo, 964 F.2d 193, 211 (3d Cir. 1992). We need not address the exact contours of that enterprise element here, however, because Trujillo has not even alleged an enterprise at all. 20 Trujillo v. Nw Tr. Servs., Inc., No. 90509-6 result to plaintiff of severe emotional distress.' Lyons, 181 Wn.2d at 792 (quoting Kloepfel v. Bokor, 149 Wn.2d 192, 195, 66 P.3d 630 (2003)). Although a jury ultimately determines if conduct is sufficiently outrageous, the court makes the initial determination of whether reasonable minds could differ about 'whether the conduct was sufficiently extreme to result in liability.' !d. (quoting Dicomes v. State, 113 Wn.2d 612, 630, 782 P.2d 1002 (1989)). To establish extreme and outrageous conduct, a plaintiff must show that the conduct was 'so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.' !d. (internal quotation marks omitted) (quoting Robel v. Roundup Corp., 148 Wn.2d 35, 51, 59 P.3d 611 (2002)). Once again, Lyons controls. It held that allegations identical to those in Trujillo's complaint fail to describe conduct sufficiently outrageous to support an intentional infliction of emotional distress claim. !d. at 793.