Court Opinion

ID: 4663849
Source: CourtListenerOpinion
Date Created: 2021-03-01 20:18:33.300378+00
Date Added: 2024-06-11T08:02:32.151187
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

In the Matter of the Trustee’s Sale of the
                                         )                        No. 80628-9-I
Real Property of: Bernard Charles Kieper,)
                                         )                        DIVISION ONE
U.S. BANK NATIONAL ASSOCIATION ND, )
                                         )                        UNPUBLISHED OPINION
             Appellant/Cross-Respondent, )
                                         )
             v.                          )
                                         )
BERNARD CHARLES KIEPER, as a             )
separate estate,                         )
                                         )
             Respondent/Cross-Appellant. )
                                         )

        HAZELRIGG, J. — U.S. Bank National Association, ND seeks reversal of an

 order denying in part its motion to disburse surplus funds from a non-judicial

 foreclosure sale. U.S. Bank argues that the trial court either failed to consider or

 failed to give proper weight to the business records that it submitted as proof of its

 lien. The Estate of Bernard C. Kieper cross-appeals, arguing that the trial court

 erred in granting U.S. Bank’s motion in part.                Because U.S. Bank produced

 sufficient evidence to establish by a preponderance the existence and amount

 owed, we reverse the partial denial of the motion.

                                              FACTS

        On November 3, 2017, Northwest Trustee Services, Inc. conducted a non-

 judicial foreclosure sale on that certain Deed for Trust dated March 7, 2003 and

   Citations and pinpoint citations are based on the Westlaw online version of the cited material.
No. 80628-9-I/2

recorded March 18, 2003 under Whatcom County Auditor’s File No. 2030303565

(Foreclosed Deed of Trust). The Foreclosed Deed of Trust was from Bernard C.

Kieper, as a separate estate, and encumbered, in the first lien position, that certain

real property commonly known as 2424 Verona St., Bellingham, WA 98229-3746.

Surplus funds from the sale totaling $118,520.19 were deposited with the Clerk of

the Whatcom County Superior Court.

       On May 15, 2018, U.S. Bank National Association, ND filed a motion

seeking disbursement of $87,559.69 of the surplus funds under RCW 61.24.080.

U.S. Bank attached a copy of a signed “Equiline Agreement” showing that it made

a home equity line of credit loan to Kieper in the principal amount of $84,500 in

January 2006. The Equiline Agreement stated that Kieper could draw on the line

of credit by using one of the checks provided to him by U.S. Bank, using the

provided VISA credit card to make purchases or receive cash advances, or by

attaching the line of credit to a bank account. Cash advances could be obtained

with the VISA credit card via ATM transactions. U.S. Bank also attached a Deed

of Trust from Bernard C. Kieper and Marlene T. Kieper to U.S. Bank as beneficiary,

recorded January 27, 2006 under Whatcom County Auditor’s File No.

2060104426. Finally, U.S. Bank submitted a letter from its foreclosure department

stating the payoff information for Kieper’s loan and showing $84,357.58 in principal

and $3,202.11 in interest for a total of $87,559.69 owed as of the date of the

foreclosure sale. However, the proposed order that U.S. Bank submitted with its

motion stated that $14,981.93 would be disbursed. At a hearing on the motion,

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No. 80628-9-I/3

Judge Charles R. Snyder signed the unopposed Order for Disbursement of

Surplus Funds as presented.

       The Kieper Estate sought disbursement of the remaining funds in the court

registry.   U.S. Bank then filed a second motion seeking an amended order

disbursing the full $87,559.69 requested in its first motion. U.S. Bank’s motion

explained that the previously signed order erroneously stated the wrong amount.

In support of the motion, U.S. Bank attached the same three loan documents as

well as a transaction history statement for the loan. The Kieper Estate opposed

U.S. Bank’s motion and renewed its motion for disbursement of the remaining

funds, which U.S. Bank opposed.

       On February 22, 2019, a hearing on the competing motions took place

before Judge Snyder. The court indicated that the evidence produced by U.S.

Bank was not specific enough for the court to determine with confidence that the

transactions were what they purported to be. The court denied both motions

without prejudice pending production of more detailed evidence.

       Both parties again moved for disbursement.        In addition to the loan

documents, U.S. Bank submitted a declaration of an employee loan officer. The

officer stated that they were “competent to review loan records and evaluate status

based upon those records” and that they “personally [knew] that the records kept

are done so in the course of regularly conducted business and as a matter of

business routine.” They stated that “[e]ntries in these records are made at or near

the time of the event recorded by or with information from a person with knowledge

of the event recorded.” The transaction history detailing the line items charged to

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No. 80628-9-I/4

the account was attached to the declaration, and the officer provided a detailed

explanation of the transaction codes or categories that appeared in the document.

The officer also stated that the initial draw on the line of credit occurred on January

11, 2006 with a check for $27,758.30 generated to pay off and close another

account. A disbursement summary dated January 11, 2006 documenting the

payment was attached to the declaration.

        A hearing on the competing motions took place on August 30, 2019 before

Judge Lee P. Grochmal. Judge Grochmal indicated that there was not “a lot of

additional detail provided by the bank since Judge Snyder made his ruling.” The

court was concerned that the transaction history was “a blanket statement” and

stated that “there must be some documentation that backs up the fact that this

borrower took the money out of the bank.” The court found that there was sufficient

evidence of the $27,758.30 balance advance dated January 11, 2006 and

authorized disbursement of the funds to U.S. Bank in that amount. The court

denied the remainder of the requested disbursement to U.S. Bank with prejudice.

The parties agreed that the Kieper Estate was undisputedly owed at least $30,000

of the funds in the registry, and the court authorized disbursement of that sum.

U.S. Bank appealed the partial denial of its motion. The Kieper Estate cross-

appealed the partial grant of U.S. Bank’s motion.1

        1A commissioner of this court entered a notation ruling on December 20, 2019 stating that
the Kieper Estate’s cross-appeal would be considered timely under the circumstances of this case
and allowed both the appeal and the cross-appeal to proceed.

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No. 80628-9-I/5

                                     ANALYSIS

I.     Consideration of Business Records

       U.S. Bank first argues that the trial court erred in either refusing to admit the

business records or, if the records were admitted, in refusing to give them

appropriate weight.

       A. Preservation

       The Kieper Estate argues that we should refuse to review U.S. Bank’s

assignments of error because U.S. Bank did not argue before the trial court that

its records should be admissible under the Uniform Business Records as Evidence

Act (UBRA)2 or that the court failed to give weight to the information in its records.

Generally, we will not review an issue that is raised for the first time on appeal and

was not pleaded or argued before the trial court. RAP 2.5(a); Wash. Fed. Sav. v.

Klein, 177 Wn. App. 22, 29, 311 P.3d 53 (2013).

       Although U.S. Bank did not specifically argue that the records were

admissible under the UBRA, the sufficiency of U.S. Bank’s evidence as proof of

the debt owed by Kieper was the central issue before the trial court. The parties

briefed and argued this issue before the trial court, giving the court an opportunity

to decide the claim of error. We will review U.S. Bank’s assignments of error.

       B. Admission

       U.S. Bank contends that it is unclear from the record whether the court

admitted and considered the business records but argues that the court erred

       2   Chap. 5.45 RCW.

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No. 80628-9-I/6

either in refusing to admit and consider the records or, if the records were admitted,

in failing to give them appropriate weight. It argues that the orders entered by the

trial court do not refer to the admission or denial of the proffered business records

and the trial court never specified whether it admitted the records in whole or in

part but found them unreliable or refused to consider the records because they did

not meet the standards for admission. The Kieper Estate contends that the trial

court admitted and considered the business records offered by U.S. Bank but

found the evidence to be substantively insufficient.

       There is no indication in the record that the court found the records

inadmissible. The Kieper Estate did not object to the admissibility of the records,

and the court did not explicitly engage in an admissibility analysis on the record

during the hearing. In its order disbursing funds to U.S. Bank, the court stated that

it had “considered the Declaration and Exhibits filed in support of [U.S. Bank’s]

motion.” This shows that the court admitted and evaluated the business records,

then based its ruling on the sufficiency of the evidence.

       U.S. Bank also argues that the court failed to give the records due weight

under UBRA. The UBRA “makes evidence that would otherwise be hearsay

competent testimony.” State v. Fleming, 155 Wn. App. 489, 499, 228 P.3d 804

(2010).   Under RCW 5.45.020, certain requirements must be met to allow

admission of this evidence:

       To be admissible under the business records exception, (1) the
       business record must be in record form; (2) be of an act, condition,
       or event; (3) be made in the regular course of business; (4) be made
       at or near the time of the fact, condition, or event; and (5) the court
       must be satisfied that the sources of information, method, and time
       of preparation justify admitting the evidence.

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No. 80628-9-I/7

Id. Under UBRA, business records are presumptively reliable if made in the

regular course of business and if there was no apparent motive to falsify. Id. In

State v. Fleming, Division Two of this court noted that “[n]o Washington case has

squarely addressed whether a trial court errs by admitting evidence under the

business record exception where there are questions regarding the records’

accuracy” and concluded that contentions of anomalies in the record-keeping went

to the weight of the evidence rather than its admissibility. Id. at 500–01. The

statement in Fleming regarding the presumptive reliability of business records

appears to relate to the admissibility of the records rather than the weight to be

given to the evidence once admitted. U.S. Bank has not shown that the court erred

in its assessment of this evidence.

II.    Disbursement

       U.S. Bank next contends that the court erred in denying distribution of the

surplus funds to U.S. Bank for the full amount of its claim. When a trial court bases

its decision on distribution of funds under RCW 61.24.080 solely on documentary

evidence, declarations, and memoranda of law, we stand in the same position as

the trial court and review the decision de novo. Matter of Anderson, 8 Wn. App.

2d 41, 45, 436 P.3d 853 (2019).         “[A] party claiming surplus funds from a

foreclosure sale under RCW 61.24.080(3) needs to demonstrate the right to assert

the debt and the amount owed by a preponderance of evidence.” Id. at 46.

       In arguing that U.S. Bank’s evidence was insufficient to prove its claim, the

Kieper Estate relies primarily on two cases involving collection actions on alleged

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No. 80628-9-I/8

credit card debt: Discover Bank v. Bridges, 154 Wn. App. 722, 226 P.3d 191

(2010), and Citibank S.D. N.A. v. Ryan, 160 Wn. App. 286, 247 P.3d 778 (2011).

U.S. Bank argues that these cases do not support the partial denial of its motion.

In both cases, the trial court granted summary judgment for the banks, which this

court reversed on appeal. Bridges, 154 Wn. App. at 724; Ryan, 160 Wn. App. at

288.

       In Bridges, Discover Bank supported its motion for summary judgment with

an affidavit of an employee of an affiliated entity that assisted Discover in collecting

delinquent debts with attached account statements and a cardmember agreement,

as well as a second affidavit explaining the relationship between Discover Bank

and the affiliated entity. 154 Wn. App. at 724–25. Division Two of this court found

that this evidence was not sufficient to establish that there was no genuine issue

of material fact when viewed in the light most favorable to the nonmoving party.

Id. at 726–27. The court found that Discover Bank had not met its burden to show

acceptance of the cardmember agreement and personal acknowledgement of the

account:

       Discover Bank’s pleadings disclose neither a signed agreement
       between Discover Bank and the Bridgeses nor detailed, itemized
       proof of the Bridgeses’ card usage. Nor do they show that the
       Bridgeses acknowledged the debt, for example, through evidence of
       cancelled checks or online payment documentation. The record
       contains only monthly statements summarizing the Bridgeses’
       alleged account balance and payments purportedly made thereon
       and affidavits from DFS employees, who were familiar with the
       Bridgeses’ purported account records.

Id. at 727.

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No. 80628-9-I/9

       In Ryan, Citibank supported its motion for summary judgment with an

affidavit of its employee setting forth the total claimed debt with attached monthly

account statements and a six-page unsigned credit card agreement. 160 Wn. App.

at 288. The account statements showed payments made on the account but made

no indication of how the payments were made, nor did they “cover the period in

which the card was first issued or the majority of the debt was accumulated.” Id.

This court, relying on Bridges, found that the “bare notation of supposed payments

on the account statements” was not sufficient to prove Ryan’s personal

acknowledgement of the debt. Id. at 293. We also rejected Citibank’s argument

that a numerical amount under the heading “purchase” on some of the account

statements proved Ryan’s assent to the cardholder agreement by establishing that

he personally used the card:

       None of the notations on the statements offered by Citibank here
       actually explained what the supposed purchase was or who it was
       from. Nor is it clear whether these were individual “purchases” or
       were only total amounts for the period covered by the statement.
       Moreover, these supposed purchases did not add up to anything
       near the total Citibank claimed was owed on the card. And the
       account statements did not otherwise provide a basis to match the
       listed amounts with any particular charge slip or purchase. The
       materials Citibank provided thus did not constitute the detailed and
       itemized documentation required by Bridges.

Id.

       More recently, we relied on Bridges and Ryan to uphold a grant of summary

judgment for a bank in an action to collect credit card debt in American Express

Centurion Bank v. Stratman, 172 Wn. App. 667, 669, 292 P.3d 128 (2012). In

Stratman, American Express supported its motion for summary judgment with an

employee declaration stating that they had personal knowledge that the records

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No. 80628-9-I/10

were kept in the ordinary course of business, that it was the regular practice to

record transactions on or about the time of occurrence, and that $21,939.37 was

owed on the account. 172 Wn. App. at 670. Attached to the declaration were

account statements addressed to Stratman referencing the same account number

and showing that Stratman had been issued a credit card and had made both

purchases and payments on the account. Id. at 671. An unsigned cardmember

agreement was also attached, which stated that “[w]hen you keep, sign or use the

Card issued to you (including any renewal or replacement Cards), or you use the

account associated with this Agreement (your ‘Account’), you agree to the terms

of this Agreement.” Id. We found that there was no genuine issue of material fact

that Stratman used the credit card because the account statements provided the

date and amount of individual purchases as well as the name of the entity from

whom the goods or services were purchased. Id. at 674. Unlike Bridges and Ryan,

“the information contained in Stratman’s account statements provided a sufficient

basis ‘to match the listed amounts with [a] particular charge slip or purchase.’” Id.

(quoting Ryan, 160 Wn. App. at 293).

       Here, in contrast to Bridges and Ryan, U.S. Bank proved the existence and

balance of the lien by a preponderance of evidence. See CR 56; Anderson, 8 Wn.

App. 2d at 46. U.S. Bank produced a signed agreement showing that Kieper

agreed to a home equity line of credit in the amount of $84,500 and a recorded

deed of trust. This evidence was sufficient to establish the existence of its lien

against the surplus funds.

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No. 80628-9-I/11

       The evidence submitted by U.S. Bank to establish the balance of the

account was most analogous to the evidence produced in Stratman. The Equiline

Agreement stated that Kieper could draw on the line of credit via check, VISA credit

card, or ATM withdrawal. U.S. Bank submitted a transaction history statement

similar to that submitted in Stratman showing the date, description code, amount,

and principal balance resulting from each transaction.         It also presented an

employee declaration explaining the description codes and stating that the record

was created in the usual course of business and at the time of each transaction.

       The Kieper Estate argues that the documents submitted by U.S. Bank do

not agree on the amount owed. The transaction history statement showed a total

principal balance of $84,357.58 as of the last entry on April 22, 2019. U.S. Bank

also submitted a letter showing a principal balance of $84,357.58 on Kieper’s

account and interest of $3,202.11 for a total of $87,559.69, the amount of U.S.

Bank’s requested disbursal. Although the loan account balance listed in the letter

is greater than the principal amount of the loan, the signed Equiline Agreement

explicitly permits the addition of unpaid finance charges to the total.

       Although the transaction history is less specific than the statements in

Stratman, it is sufficient to show that the balance of the lien was more likely than

not the amount requested by U.S. Bank. The court erred in denying U.S. Bank’s

motion in part.

III.   Cross-Appeal

       In its cross-appeal, the Kieper Estate argues that the trial court erred in

granting U.S. Bank’s motion for disbursal in part and in disbursing $27,758.30 to

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No. 80628-9-I/12

U.S. Bank. The Kieper Estate contends that U.S. Bank failed to present sufficient

or competent evidence of funds disbursed to the alleged debtor, of the alleged

debtor’s acknowledgement of payments or disbursements, or of any other detailed,

itemized documentation of the alleged debt or transaction. Consistent with the

conclusion above that there was sufficient evidence to show that U.S. Bank was

more likely than not owed the full disbursement of $87,559.69, the court did not err

in granting partial disbursement to U.S. Bank.

       The Kieper Estate also requests an award of its attorney fees and costs

under RAP 18.1. A party may request an award of attorney fees and costs if the

applicable law provides the right to recover fees and costs on appeal. RAP 18.1(a).

The Kieper Estate cites to the Equiline Agreement, which entitles U.S. Bank to an

award of reasonable attorney fees and costs in collection actions. The Kieper

Estate argues that this provides a basis for the award it seeks under RCW

4.84.330. This statute provides that when a contract specifically states that one

party is entitled to attorney fees and costs incurred to enforce the contract, the

prevailing party in the action shall be entitled to reasonable attorney fees,

regardless of whether the prevailing party is the party entitled to fees under the

agreement. RCW 4.84.330. Because the Kieper Estate is not the prevailing party

on appeal, the request for attorney fees and costs is denied.

       Reversed.

WE CONCUR:

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