Court Opinion

ID: 4098148
Source: CourtListenerOpinion
Date Created: 2016-11-15 05:39:05.775868+00
Date Added: 2024-06-11T14:36:39.988649
License: Public Domain

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

DEUTSCHE BANK TRUST COMPANY
AMERICAS AS INDENTURE                        No. 75695-8-1
TRUSTEE FOR THE REGISTERED
HOLDERS OF SAXON ASSET                       DIVISION ONE
SECURITIES TRUST 2005-1
MORTGAGE LOAN ASSET BACKED
NOTES, SERIES 2005-1,

                    Respondents,
                                             UNPUBLISHED OPINION
       V.

ALBERTO E. AVALO; VICTORIA L.
AVALO,

                    Appellants,

WELLS FARGO FINANCIAL
WASHINGTON 1, INC.; ALSO ALL
PERSONS OR PARTIES UNKNOWN
CLAIMING ANY RIGHT, TITLE, LIEN,
OR INTEREST IN THE PROPERTY
DESCRIBED IN THE COMPLAINT
HEREIN,
                                             FILED: November 14, 2016
                    Defendants.

      LEACH, J. — Alberto and Victoria Avalo appeal the summary judgment

entered in favor of Deutsche Bank Trust Company Americas. After the Avalos

defaulted on a loan, Deutsche Bank commenced a judicial foreclosure. The Avalos

claim that questions of fact exist about Deutsche Bank's authority to foreclose.

However, as holder of the note, Deutsche Bank had the authority to enforce the
No. 75695-8-1 /2

note and commence judicial foreclosure of the deed of trust. Because no

questions of fact exist as to any issue material to the judgment, we affirm.

                                  BACKGROUND

       In December 2004, the Avalos signed a promissory note in the amount of

$388,218 for a loan from Saxon Mortgage Inc. A deed of trust encumbering the

Avalos' property secured the loan. Saxon endorsed the note to Deutsche Bank.

Assignment of the deed of trust to Deutsche Bank was recorded on June 25, 2010.

       The Avalos defaulted on their loan and, in May 2009, entered into a loan

modification agreement with Deutsche Bank. In July 2011, the Avalos again

stopped making payments on their loan. In response, the loan servicer sent a

notice of default to the Avalos. This notice told the Avalos that to cure default they

needed to pay $9,621.12 by August 9, 2011. The Avalos failed to cure the default.

Deutsche Bank filed an action to enforce the note and foreclose the deed of trust.

       Deutsche Bank moved for summary judgment. Deutsche Bank supported

its motion with an affidavit attesting to its possession of the note and beneficial

interest in the deed of trust. At the summary judgment hearing, Deutsche Bank

also produced the original promissory note. In opposition to the summary

judgment motion, the Avalos submitted a document called "Chain of Title Analysis

& Mortgage Fraud Investigation" (chain of title analysis) prepared for the Avalos by

a company called Mortgage Compliance Investigators (MCI). The chain of title

analysis summarized MCI's forensic audit of the Avalos' individual mortgage.

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No. 75695-8-1/ 3

      The trial court granted summary judgment to Deutsche Bank. The Avalos

appeal.

                                  DISCUSSION

                               Standard of Review

      We review an order granting summary judgment de novo, performing the

same inquiry as the trial court) The initial burden is on the moving party to show

no genuine issue of fact exists.2 The burden then shifts to the nonmoving party to

"set forth specific facts to rebut the moving party's contentions and show that a

genuine issue as to a material fact exists."3 A material fact is one on which the

outcome of the litigation depends.4 "The nonmoving party must set forth specific

facts showing a genuine issue and cannot rest on mere allegations."5 Summary

judgment is appropriate when, taking all facts and reasonable inferences in the

light most favorable to the nonmoving party, no genuine issue of material fact

exists and the moving party is entitled to judgment as a matter of law.6

       1 Hayden   v. Mut. of Enumclaw Ins. Co., 141 Wash. 2d 55, 63-64, 1 P.3d 1167
(2000).
       2 Deutsche Bank Nat'l Tr. Co. v. Slotke, 192 Wash. App. 166, 171, 367 P.3d
600, review denied, 185 Wash. 2d 1037 (2016).
       3 Allard v. Bd. of Regents of Univ. of Wash., 25 Wash. App. 243, 247, 606
P.2d 280 (1980).
       4 Greater Harbor 2000 v. City of Seattle, 132 Wash. 2d 267, 279, 937 P.2d
1082 (1997).
       5 Baldwin v. Sisters of Providence in Wash., Inc., 112 Wash. 2d 127, 132, 769
P.2d 298 (1989).
       6 Wilson v. Steinbach, 98 Wash. 2d 434, 437, 656 P.2d 1030 (1982).

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No. 75695-8-1/ 4

                               Summary Judgment

      First, we address the Avalos' claim that the trial court committed evidentiary

error. The Avalos contend that the trial court should not have considered the

affidavit of Nicole Boutin and the attached business records because she did not

demonstrate personal knowledge as required by CR 56(e).7 However, the trial

court could not have considered this affidavit at summary judgment because it was

not part of the record when the court granted the motion. The trial court granted

summary judgment on February 13, 2015. Deutsche Bank submitted the Boutin

affidavit on May 4, 2015, in support of its motion for entry of judgment and decree

of foreclosure. Because this affidavit was submitted to the court after the court

decided the summary judgment motion, it could not have influenced the court's

decision on the motion.

       Next, we consider the Avalos' contention that a question of fact exists as to

Deutsche Bank's authority to enforce the note and deed of trust. Washington law

is clear: the holder of an instrument is entitled to enforce that instrument.8

Deutsche Bank submitted undisputed evidence that it was the holder of the note.

While the Avalos deny that Deutsche Bank was the holder of the note, they have

submitted no evidence to contradict Deutsche Bank's evidence. The Avalos claim

that the chain of title analysis creates an issue of disputed fact. But it does not

       7See Barkley v. GreenPoint Mortg. Funding, Inc., 190 Wash. App. 58, 67, 358
P.3d 1204 (2015), review denied, 184 Wash. 2d 1036 (2016).
      8 RCW 62A.3-301; Brown v. Dep't of Commerce, 184 Wash. 2d 509, 524-25,
359 P.3d 771 (2015); Bain v. Metro. Mortg. Grp., Inc., 175 Wash. 2d 83, 104, 285
P.3d 34 (2012).

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No. 75695-8-1 / 5

because the analysis does not dispute that Deutsche Bank was the holder of the

note, the only relevant fact about Deutsche Bank's authority to foreclose. Thus,

under well-established Washington law, Deutsche Bank was entitled to enforce the

note.

        The Avalos challenge Washington law, asserting that how a note is acquired

is also relevant. They contend that Deutsche Bank is not entitled to enforce the

note unless it has established its chain of title. They contend that the holding of

Bain v. Metropolitan Mortqaqe Group, Inc.9 and other Washington case law—that

the security follows the holder of the note—should not apply in cases of fraud and

"egregious errors," including breaks in the chain of title. They rely on RCW

65.08.070 for the proposition that holder status must be proved with evidence of a

legitimate delivery. But the Avalos misunderstand the significance of this law.

RCW 65.08.070, Washington's recording act, "make[s] the deed first recorded

superior to any outstanding unrecorded conveyance of the same property unless

the mortgagee or purchaser had actual knowledge of the transfer not filed of

record.'"1° This statute does not require that a note be recorded before the holder

of that note can enforce it. Washington law requires only that Deutsche Bank

currently holds the note.11 Therefore, the Avalos' chain of title evidence has no

relevance to Deutsche Bank's authority to initiate foreclosure. Undisputed

     9 175 Wash. 2d 83, 285 P.3d 34 (2012).
     10 Hu Hyun Kim v. Lee, 145 Wash. 2d 79, 86, 31 P.3d 665 (2001) (quoting
Tacoma Hotel, Inc. v. Morrison & Co., 193 Wash. 134, 140,74 P.2d 1003 (1938)).
     11 Bain, 175 Wash. 2d at 102-04.

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No. 75695-8-1 /6

evidence shows that the trial court properly granted summary judgment in favor of

Deutsche Bank.

                                    Discovery

       The Avalos contend that the trial court should have allowed them to conduct

additional discovery before ruling on Deutsche Bank's summary judgment motion.

Delaying a motion hearing to permit a party to conduct further discovery may be

appropriate where "'the party cannot present by affidavit facts essential to justify

the party's opposition.'"12 But if the party opposing the motion cannot show that it

is likely to discover evidence that would create an issue of fact, the court is not

required to delay the summary judgment hearing.13 We review a trial court's

decision to grant or deny a request for a continuance to conduct discovery for

abuse of discretion.14

       Here, the Avalos requested additional time to conduct discovery. The trial

court delayed the summary judgment hearing for nearly a month to give the Avalos

time to respond to Deutsche Bank's motion. This gave them time to obtain the

chain of title analysis that they submitted with their amended opposition to

summary judgment on February 9. The trial court refused to continue the hearing

further because it concluded that the Avalos had not identified what additional

evidence they hoped to discover.15 The Avalos claim they needed additional

      12 MRC Receivables Corp. v. Zion, 152 Wash. App. 625, 628-29, 218 P.3d
621 (2009) (quoting CR 56(f)).
      13 Turner v. Kohler, 54 Wash. App. 688, 693, 775 P.2d 474 (1989).
      14 MRC Receivables Corp., 152 Wash. App. at 629.
      15 The Avalos contend that what evidence they hoped to discover was
apparent from the chain of title analysis attached to their opposition to the summary

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No. 75695-8-1/ 7

discovery in order to support the conclusions of the chain of title analysis and

present evidence of breaks in the chain of title. They claim that their discovery

requests could have asked Deutsche Bank to explain these alleged breaks in the

chain of title and provide details about "the nature of the transaction." As discussed

above, the trial court properly concluded that information contained in the chain of

title analysis was not relevant. Thus, discovery to confirm the conclusions of this

document would not create an issue of fact. The trial court did not abuse its

discretion by denying the Avalos addition time for discovery.

                                 CR 54(e) Violation

         The Avalos contend that the trial court should have required Deutsche Bank

to refile its motion because it presented the court with a proposed order too late to

satisfy the rules. CR 54(e) requires the attorney for the prevailing party to "prepare

and present a proposed form of order or judgment not later than 15 days after the

entry of the verdict or decision, or at any other time as the court may direct." The

trial court granted summary judgment on February 13, 2015. Deutsche Bank did

not present the court with a proposed order until May 4, 2015, nearly three months

later.

         Deutsche Bank does not dispute the delay but contends that the remedy for

this error is not reversal. CR 54(e) provides a remedy when the prevailing party

does not present a proposed order in a timely manner: "any other party may do

judgment motion, but they do not reference specific evidence that would create an
issue of fact.

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No. 75695-8-1 / 8

so." When Deutsche Bank did not submit a timely proposed order, the Avalos were

free to submit their own proposed order. But they did not.

       Further, judgments entered in spite of procedural error are valid unless the

complaining party shows resulting prejudice.16 A party is not prejudiced if it is able

to timely appeal and argue any issues it wishes to raise.17 Under this standard,

the Avalos do not show prejudice.

                                   Attorney Fees

       Deutsche Bank requests an award of costs and fees as the prevailing party

based on RCW 4.84.330 and RAP 18.1. RAP 18.1 allows this court to award

attorney fees when applicable law authorizes them. "RCW 4.84.330 permits a

party to recover reasonable attorney fees and costs in any action on a contract

where the contract provides for this award."18 Here, the deed of trust provides,

"Lender shall be entitled to recover its reasonable attorneys' fees and costs in any

action or proceeding to construe or enforce any term of this Security Instrument."

Because the deed of trust authorizes a fee award and Deutsche Bank is the

prevailing party, we award reasonable attorney fees and costs on appeal, subject

to its compliance with RAP 18.1.

       16Burton v. Ascol, 105 Wash. 2d 344, 352, 715 P.2d 110 (1986) ("A judgment
entered without the notice required by CR 54(f)(2) is not invalid, however, where
the complaining party shows no resulting prejudice.").
      17 Burton, 105 Wash. 2d at 352-53.
      18 Slotke, 192 Wash. App. at 179.

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No. 75695-8-1/ 9

                                   CONCLUSION

          The Avalos have not demonstrated, the existence of any genuine issue of

material fact relevant to Deutsch Bank's authority to foreclose. Accordingly, we

affirm.

WE CONCUR:

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