United States District Court, E.D. Washington
DANIEL SMITH, an individual, and DANETTE SMITH, an individual, Plaintiffs,
NORTHWEST TRUSTEE SERVICES, INC., a corporation; FEDERAL NATIONAL MORTAGAGE ASSOCIATION, a corporation; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS (MERS), a corporation; and SUNSET MORTGAGE, INC., a corporation, Defendants.
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
ROSANNA MALOUF PETERSON, Chief District Judge.
Defendants SunTrust Mortgage, Inc. ("SunTrust"), Federal National Mortgage Association ("Fannie Mae"), and Mortgage Electronic Registration Systems, Inc. ("MERS") move for summary judgment and dismissal with prejudice of Plaintiffs Daniel and Danette Smith's Complaint against them. ECF No. 14. Defendant Northwest Trustee Services ("NWTS") filed a declaration in support of the motion for summary judgment. ECF No. 21. Plaintiffs, who are pro se, have not filed a response. See ECF No. 23.
Plaintiffs borrowed $153, 000 from SunTrust to purchase real estate in Yakima, Washington. ECF No. 16 at 3. Plaintiffs executed a promissory note dated August 14, 2008, payable on the order of SunTrust for the principal amount of the loan. ECF No. 16-1.
To secure their obligation due under the note, Plaintiffs granted a deed of trust to the trustee Washington Administrative Services, Inc., identifying MERS as the beneficiary, "acting solely as a nominee for Lender and Lender's successors and assigns." ECF Nos. 16 at 4; 16-2 at 1.
Before discussing the remaining facts, the Court briefly summarizes relevant background on deeds of trust and MERS. A deed of trust is a form of a three-party mortgage. 18 WILLIAM B. STOEBUCK & JOHN W. WEAVER, WASHINGTON PRACTICE: REAL ESTATE: TRANSACTIONS § 20.1 (2d ed. 2004). A borrower takes on a debt to a beneficiary, "and, as security for that obligation, the grantor' conveys an estate in land to a third-party trustee.'" Id. The trustee has the power to foreclose by nonjudicial sale if the borrower defaults. Id. The beneficiary may replace the trustee. RCW 61.24.010(2).
The MERS system places a fourth party into the deed of trust arrangement. Bain v. Metro. Mortgage Grp., Inc., 175 Wn.2d 83, 96-7 (2012). In addition to the lender (who traditionally is the beneficiary of the deed of trust), the borrower, and the trustee, MERS steps in as a nominee for the lender. Id. at 88, 96-97. MERS maintains an electronic registry that tracks mortgage rights. Id. at 95. "This was intended to reduce the costs, increase the efficiency, and facilitate the securitization of mortgages and thus increase liquidity." Id.
In this case, beginning in January 2010 Plaintiffs defaulted on their loan by failing to make monthly payments. ECF No. 16 at 5. After Plaintiffs defaulted, SunTrust caused MERS, acting as SunTrust's nominee, to assign its interest in the deed of trust to SunTrust. ECF Nos. 16 at 5; 16-3. Acting as the beneficiary of the deed of trust, SunTrust then appointed NWTS to serve as successor trustee. ECF Nos. 16 at 5; 16-4.
Plaintiffs did not cure the default in their loan payments. ECF No. 16 at 5. On or after October 19, 2011, NWTS provided SunTrust with notice of a trustee's sale scheduled for January 20, 2012. ECF No. 16 at 5. NWTS issued the same notice to Plaintiffs. See ECF Nos. 1-1 at 5; 16 at 5. The trustee's sale was canceled because Plaintiffs filed for bankruptcy. ECF No. 16 at 6. However, a second trustee's sale was scheduled for July 26, 2013. ECF No. 16 at 6. NWTS issued Plaintiffs a second notice of trustee's sale. ECF No. 16 at 6. Shortly after July 26, 2013, NWTS informed SunTrust that the property was sold to Fannie Mae at the trustee's sale for $206, 631.80 and that NWTS had issued its trustee's deed to Fannie Mae. ECF No. 16 at 6.
SunTrust asserts in an affidavit that it attempted to work with Plaintiffs to modify their mortgage loan so that they could keep their home, but that Plaintiffs did not comply with loan modification requirements. ECF No. 16 at 6.
Plaintiffs have not responded to the motion for summary judgment. See ECF No. 23. In their complaint, Plaintiffs allege that MERS unlawfully assigned the deed of trust to SunTrust and that SunTrust unlawfully appointed NWTS as the successor trustee under the deed of trust. ECF No. 1-1 at 5. Plaintiffs also claim that the notice of trustee's sale was deficient and that Defendants neglected to offer mediation or discuss other options for avoiding foreclosure. ECF No. 1-1 at 6.
Plaintiffs seek to set aside the trustee's sale of the property, to cancel the trustee's deed acquired through the sale, and to obtain damages for wrongful foreclosure. ECF No. 1-1 at 7-9. Defendants SunTrust, Fannie Mae, and MERS move for summary judgment. ECF No. 14. The Court assumes that Defendant NWTS joins the motion because it filed a declaration in support of summary judgment, ECF No. 21.
Before turning to the summary judgment issues, the Court considers Defendants' request for judicial notice of certain facts. ECF No. 17. To be eligible for judicial notice, a fact must be one not subject to reasonable dispute because it is generally known or "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed.R.Evid. 201(b). A court "must take judicial ...