Court Opinion

ID: 4650488
Source: CourtListenerOpinion
Date Created: 2021-01-11 19:22:49.163702+00
Date Added: 2024-06-11T08:01:33.354393
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 PATRICK PRICE and SUZANNE
 PRICE and 4356 92nd AVENUE, LLC,                 DIVISION ONE

                         Appellants,              No. 80572-0-I

                    v.                            UNPUBLISHED OPINION

 SEL, INC., and THOMAS ANDREW
 LERNER,

                         Respondents,

 CHARLES NEFF, KAREN
 JENSEN, and Doe Defendants
 1 through 20,

                         Defendants.

       DWYER, J. — Patrick and Suzanne Price formed 4356 92nd Avenue, LLC

to purchase a home using seller financing. The LLC defaulted on its payments to

the sellers. Foreclosure trustee SEL, Inc. initiated a nonjudicial foreclosure. The

LLC and the Prices sued the sellers, SEL Inc., and the attorney acting on behalf

of SEL, Inc., claiming violations of the Consumer Protection Act, chapter 19.86

RCW, due to violations of the Deeds of Trust Act, chapter 61.24 RCW. The

superior court dismissed the complaint on summary judgment. Because the

Prices lack standing to bring this cause of action and the LLC fails to raise a

genuine issue of material fact regarding at least two essential elements of its

claim, we affirm.
No. 80572-0-I/2

                                        I

      In August 2016, appellant 4356 92nd Avenue, LLC (92nd Avenue LLC or

the LLC) purchased a home located at 4356 92nd Avenue SE, Mercer Island,

Washington (Property) from Karen Jensen and Charles Neff (the Neffs) for

approximately $3.650 million.

      Appellants Patrick and Suzanne Price (the Prices) created 92nd Avenue

LLC for the specific and sole purpose of acquiring and developing the Property.

The Prices and their two adult daughters are the members of the LLC.

      92nd Avenue LLC used seller financing to purchase the Property. On or

around August 12, 2016, the LLC entered into an amended and restated

promissory note (Amended Promissory Note) for $3.650 million payable to the

Neffs. The Amended Promissory Note was secured by a deed of trust naming

92nd Avenue LLC as the borrower and the Neffs as the lenders. Copper Leaf,

LLC, a business owned by a friend of the Prices, guaranteed the promissory note

in a separate written guarantee agreement.

      The Amended Promissory Note legally obligated 92nd Avenue LLC to

make monthly installment payments of $10,645.83 starting September 1, 2016

and quarterly payments of principal of $100,000 from September 30, 2016 to

December 31, 2018.

      92nd Avenue LLC initially made its payments to the Neffs pursuant to its

obligations under the Amended Promissory Note. However, the LLC defaulted

when it failed to make its payments due on March 31, 2017. Appellants do not

dispute that 92nd Avenue LLC defaulted on its payments to the Neffs.

                                       2
No. 80572-0-I/3

       As a result of the default, on April 4, 2017, the law firm Stokes Lawrence,

representing the Neffs, issued a notice of default to 92nd Avenue LLC. The

notice of default stated that the Neffs had elected to accelerate the debt and

“declare all outstanding sums owed on the Note to be immediately due and

payable.” “You must pay the sum of $3,462,354.17 plus such actual attorneys’

fees and expenses plus such interest as accrues after April 4, 2017 to reinstate

your rights under the Deed of Trust prior to our recording the Notice of Sale.”

The notice also stated that interest was continuing to accrue at the default rate of

eight percent.

       On or around May 18, 2017, Stokes Lawrence attorney Thomas Lerner,

on behalf of the firm’s separate corporate entity SEL, Inc., issued and recorded a

notice of trustee’s sale. The notice stated that the Property would be sold on

August 11, 2017.

       On or around July 13, 2017, SEL, Inc. issued and recorded an amended

notice of trustee’s sale, setting the Property sale for October 13, 2017.

       The day before the scheduled Property sale, the Prices entered into a

residential lease agreement with 92nd Avenue LLC to lease the Property for

$10,000 per month.

       On October 13, 2017, the day the Property was scheduled to be sold,

92nd Avenue LLC filed for bankruptcy in the United States Bankruptcy Court for

the Western District of Washington. The bankruptcy filing obligated SEL, Inc. to

postpone the scheduled Property sale, which it did.

                                         3
No. 80572-0-I/4

       The parties eventually stipulated to the dismissal of the bankruptcy

proceedings. The bankruptcy court dismissed the bankruptcy case on February

27, 2018. Patrick Price confirmed that the dismissal was to allow the nonjudicial

foreclosure to proceed.

       SEL, Inc. then executed a second amended notice of trustee’s sale,

setting the Property sale for April 20, 2018.

       Two days before the scheduled Property sale, the Prices and 92nd

Avenue LLC filed the instant action against Lerner individually, SEL, Inc. as

foreclosure trustee, and the Neffs as sellers, seeking a temporary restraining

order to delay the scheduled sale and alleging Consumer Protection Act

violations based on claimed violations of the Deeds of Trust Act.

       SEL, Inc. cancelled the scheduled April 20, 2018 sale after Lerner learned

of errors in the mailing addresses used to send the second amended notice of

trustee’s sale to the Prices and that the notice had not been posted at the

Property.

       On May 11, 2018, SEL, Inc., Lerner, and the Neffs requested that the

superior court appoint a receiver to govern the LLC’s affairs and sell the

Property. Over the Appellants’ objections, the superior court granted the motion

and appointed a receiver on May 24, 2018.

       The receiver listed the Property for sale on July 10, 2018; the Property

sold in May 2019 for $3.73 million. Thus, it was on the market for about 10

months.

                                          4
No. 80572-0-I/5

        On July 19, 2019, SEL, Inc. and Lerner moved for summary judgment,

requesting that the court dismiss the plaintiffs’ complaint because the Prices and

the LLC could not establish certain elements of their Consumer Protection Act

claims.

        On August 16, 2019, the trial court granted the summary judgment motion,

dismissing the Prices’ and the LLC’s claims regarding violation of the Consumer

Protection Act, which was the only cause of action then stated. The Prices and

the LLC moved for reconsideration, which the court denied on September 3,

2019.

        The Prices and 92nd Avenue LLC appeal. 1

                                                 II

                                                 A

        We review summary judgment orders de novo, considering the evidence

and all reasonable inferences from the evidence in the light most favorable to the

nonmoving party. 2 Keck v. Collins, 184 Wn.2d 358, 370, 357 P.3d 1080 (2015).

Summary judgment is appropriate only when no genuine issue exists as to any

material fact and the moving party is entitled to judgment as a matter of

law. Keck, 184 Wn.2d at 370. If a plaintiff “‘fails to make a showing sufficient to

establish the existence of an element essential to that party’s case, and on which

that party will bear the burden of proof at trial,’” summary judgment is

        1 The claim against the Neffs was separately dismissed and is not at issue in this appeal.
        2 The appellants’ notice of appeal states that they are also seeking review of their motion
for reconsideration, which was denied on September 3, 2019. Appellants do not discuss the
motion for reconsideration specifically in their brief, nor do they urge a different standard of
review. We will review the appellants’ claims using the summary judgment de novo standard of
review; we note this standard of review is the most favorable to the appellants.

                                                 5
No. 80572-0-I/6

proper. Young v. Key Pharms., Inc., 112 Wn.2d 216, 225, 770 P.2d 182 (1989)

(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed.

2d 265 (1986)).

                                          B

       Initially, we note that the appellants’ brief on appeal does not comply with

the Rules of Appellate Procedure. Remarkably, notwithstanding the clear

requirements of RAP 10.3(a)(5), 10.3(a)(6), and 10.4(f), requiring pertinent

references to the trial court record, the appellants’ brief does not contain a single

citation to the record. In fact, the record in this appeal includes over 3,500 pages

of clerk’s papers. The appellants’ opening brief also fails to include a table of

contents, a table of cases, or assignments of error as required by RAP 10.3(a)(2)

and (a)(4). In these circumstances, counsel’s complete failure to cite to the

record and otherwise follow the Rules of Appellate Procedure is an egregious

violation of the rules and is fatal to the appeal. Cowiche Canyon Conservancy v.

Bosley, 118 Wn.2d 801, 809, 819, 828 P.2d 549 (1992).

                                          C

       But even if the appellants had complied with the Rules of Appellate

Procedure, their arguments would not warrant reversal.

       The Washington Supreme Court has held that it is possible for violations

of the Deeds of Trust Act to constitute a violation of the Consumer Protection Act,

even when there is no completed foreclosure sale and no allegation the plaintiff

has paid any foreclosure fees. See, e.g., Frias v. Asset Foreclosure Servs., Inc.,

181 Wn.2d 412, 430, 334 P.3d 529 (2014); Lyons v. U.S. Bank Nat’l Ass’n, 181

                                          6
No. 80572-0-I/7

Wn.2d 775, 784, 336 P.3d 1142 (2014). The analysis of the elements of a

Consumer Protection Act claim premised on alleged Deeds of Trust Act

violations is identical to the analysis of the elements of a Consumer Protection

Act claim premised on any other allegedly unfair or deceptive practice with a

public interest impact occurring in trade or commerce that has allegedly

proximately caused injury to a plaintiff’s business or property. Frias, 181 Wn.2d

at 432-33. Simply put, Consumer Protection Act claims alleging Deeds of Trust

Act violations are governed by the same principles as are all other Consumer

Protection Act claims. Frias, 181 Wn.2d at 432-33.

       To prove a violation of the Consumer Protection Act, a plaintiff must prove

five elements: “(1) an unfair or deceptive act or practice; (2) occurring in trade or

commerce; (3) public interest impact; (4) injury to plaintiff in his or her business

or property; (5) causation.” Hangman Ridge Training Stables, Inc. v. Safeco Title

Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986). Failure to satisfy even one

element is fatal to the claim. See Hangman Ridge, 105 Wn.2d at 793.

                                          D

       The Prices’ claim is easily disposed of. The Prices, as plaintiffs in their

individual capacities, do not have standing to bring this Consumer Protection Act

claim. The requirement of standing prevents “a plaintiff from asserting another’s

legal rights.” Trinity Universal Ins. Co. of Kan. v. Ohio Cas. Ins. Co., 176 Wn.

App. 185, 199, 312 P.3d 976 (2013). Every action must be prosecuted in the

name of the real party in interest. CR 17(a). That is, the only parties on whose

behalf suits may be initiated are those persons whose interests will be materially

                                          7
No. 80572-0-I/8

affected by the outcome. The real party in interest is “‘the person who, if

successful, will be entitled to the fruits of the action.’” Nw. Indep. Forest Mfrs. v.

Dep’t of Labor & Indus., 78 Wn. App. 707, 716, 899 P.2d 6 (1995) (quoting 3A

LEWIS H. ORLAND & KARL B. TEGLAND, WASHINGTON PRACTICE: RULES PRACTICE CR

17 author’s cmt. 1, at 420 (4th ed. 1992)). One must own a cause of action in

order to assert it.

        The Prices were not a party to the real estate or seller financing

transactions with the Neffs. 92nd Avenue LLC alone purchased the Property

from the Neffs. 92nd Avenue LLC alone entered into the Amended Promissory

Note with the Neffs. The Amended Promissory Note was secured by a deed of

trust and 92nd Avenue LLC was the sole borrower. The notices of default and

trustee’s sale, which the Prices allege were unlawful, were issued to 92nd

Avenue LLC. The Prices were not parties to the transactions. 3

        The record shows that the Prices purposefully created 92nd Avenue LLC

to enter into these transactions with the Neffs. Bankruptcy pleadings filed by

92nd Avenue LLC explain that the LLC was “formed as a Washington limited

liability company on June 28, 2016 for the purpose of acquiring and developing

the Property.” Appellants’ complaint and the attached declaration of Patrick Price

assert that the Prices chose to create 92nd Avenue LLC to purchase the

Property for reasons related to their family and the operation of their family

business. The Prices knew that they were not a party to the real estate and

        3 Without citation to the record, the Prices allege that they personally guaranteed the
Amended Promissory Note. However, their brief on appeal does not point to any evidence in the
record that they suffered any injuries or incurred any debts as guarantors.

                                               8
No. 80572-0-I/9

related loan transactions with the Neffs. Having strategically chosen the

protection of an LLC, the Prices cannot now bypass the LLC and claim an

individual interest in the LLC’s action against the seller or other parties. 4 They

cannot, in their individual capacities, commandeer and assert the legal rights of

92nd Avenue LLC.

        In short, the Prices here pursued a cause of action they do not own. We

affirm the trial court’s dismissal of the Prices’ cause of action on the basis that

they have no standing to bring such an action.

                                                E

        Turning to 92nd Avenue LLC’s claims against SEL, Inc. and Lerner, the

LLC has failed to prove at least two elements of a Consumer Protection Act

claim: (1) injury to its business or property and (2) causation. See Hangman

Ridge, 105 Wn.2d at 792-793.

        First, to prove a claim under the Consumer Protection Act, 92nd Avenue

LLC must prove that it was injured in its “business or property.” See Hangman

Ridge, 105 Wn.2d at 792.

        The Prices allege the following injuries that they personally suffered:

damage to their unrelated businesses (not 92nd Avenue LLC), including harm to

their relationship with a former business associate who formerly loaned them

money, damage to their personal finances, legal fees and other costs incurred in

filing for bankruptcy, legal fees and other costs incurred in bringing the instant

          4 Because the Prices had previously formed a different LLC to lease a separate luxury

property with an option to purchase, and then became embroiled in litigation over the transaction,
it belies credulity to believe that the Prices’ similar formation of 92nd Avenue LLC to acquire and
develop the Property was an accident.

                                                 9
No. 80572-0-I/10

action, legal fees and other costs incurred in connection with appointing a

receiver to sell the Property.

       However, the LLC does not allege any injuries whatsoever to itself.

Injuries allegedly suffered by the Prices are not injuries to the LLC. The record is

bereft of any evidence of injury to the LLC. Similarly, the LLC’s brief on appeal is

bereft of any citation to the record in support of any assertion of injuries suffered

by the LLC.

       The LLC did not suffer an injury from the sale of the Property that would

be compensable in this action (based on alleged violations of the Deeds of Trust

Act) because the Property was sold by the LLC’s own receiver, outside the scope

of the Deeds of Trust Act and subject to superior court supervision. Nor did 92nd

Avenue LLC suffer injury to its business. The LLC has not presented any

evidence that it suffered any injuries or incurred any debts. As detailed above,

the record reflects that 92nd Avenue LLC was a single-purpose entity created for

the sole purpose of acquiring and developing the Property. Although the LLC at

one point entered bankruptcy proceedings, the LLC has not presented any

evidence that the LLC suffered any injury associated with the bankruptcy and the

bankruptcy was dismissed with the specific expressed intent that the nonjudicial

foreclosure would be allowed to proceed. By allowing its bankruptcy case to be

dismissed, the LLC knew that it would be divested of its interest in the Property.

       In short, the LLC’s failure to establish a question of fact as to the “injury”

element of its Consumer Protection Act claim is fatal to its claim.

                                          10
No. 80572-0-I/11

       Second, to prove a claim under the Consumer Protection Act, 92nd

Avenue LLC must prove causation. See Hangman Ridge, 105 Wn.2d at 792-93.

A plaintiff must establish that, but for the defendant’s unfair or deceptive practice,

the plaintiff would not have suffered an injury. Indoor Billboard/Wash., Inc. v.

Integra Telecom of Wash., Inc., 162 Wn.2d 59, 81-84, 170 P.3d 10 (2007). That

is, a plaintiff has the burden of proving that a defendant’s unfair or deceptive act

or practice was a proximate cause of the plaintiff’s injury. See Indoor Billboard,

162 Wn.2d at 81-84.

       Here, 92nd Avenue LLC’s default on the Amended Promissory Note was

the sole cause of any purported injury to the LLC. SEL, Inc. and Lerner did not

become involved in this matter until after the LLC had already defaulted, when

the initial notice of trustee sale was issued in May 2017.

       The LLC points to the notice of default, which it alleges improperly

accelerated the debt and recited an incorrectly high interest rate, and the notices

of trustee sales on May 18, 2017 and February 28, 2018, which it alleges

contained various procedural errors, as the causes of injury. However, it fails to

proffer evidence to establish that this is so.

       There was no trustee’s sale pursuant to any notice of trustee’s sale. The

LLC was divested of its interest in the Property when its own receiver, on behalf

of the LLC itself and subject to judicial supervision, sold the property. The

property was marketed for approximately 10 months. As set forth in the previous

section, there are no facts in the record or identified in the briefing that indicate

                                          11
No. 80572-0-I/12

any difficulty or injury at all to the LLC caused by the allegedly defective notices.

This was not a forced sale of the Property; the LLC itself sold it. 5

        The LLC’s failure to establish a question of fact as to the causation

element of its Consumer Protection Act claim is also fatal to its claim.

        The trial court’s orders granting summary judgment to SEL, Inc. and

Lerner and denying reconsideration are affirmed.

WE CONCUR:

        5
        This action does not substitute for any proper action or objection by the LLC that could
have been made to the receiver’s actions while under superior court supervision.

                                              12