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Lucero v. Cenlar, FSB

United States District Court, W.D. Washington, Seattle

September 30, 2014

CENLAR, FSB, et al., Defendants.


ROBERT S. LASNIK, District Judge.

This matter comes before the Court on the "Motion of Defendants Cenlar, FSB, Mortgage Electronic Registration Systems, Inc., Jennifer Dobron, and Nancy K. Morris to Dismiss Plaintiff's Second Amended Complaint." Dkt. # 82. Plaintiff alleges that the moving defendants violated the Washington Deed of Trust Act ("DTA"), the Real Estate Settlement Procedure Act ("RESPA"), the Fair Debt Collection Practices Act ("FDCPA"), and the Washington Consumer Protection Act ("CPA"). In addition, plaintiff alleges that defendants Dobron and Morris engaged in fraud and that defendant Cenlar violated the Truth in Lending Act ("TILA"), breached its implied duty of good faith and fair dealing, and committed the tort of outrage. The moving defendants seek dismissal of all of plaintiff's claims.

Where, as here, a motion under Fed.R.Civ.P. 12(c) is used to raise the defense of failure to state a claim, the Court's review is the same as it would have been had the motion been filed under Fed.R.Civ.P. 12(b)(6). McGlinchy v. Shell Chem. Co. , 845 F.2d 802, 810 (9th Cir. 1988). Although the complaint need not provide detailed factual allegations, it must offer "more than labels and conclusions" and contain more than a "formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007). The Court will assume the truth of the plaintiff's allegations and draw all reasonable inferences in the plaintiff's favor. Usher v. City of Los Angeles , 828 F.2d 556, 561 (9th Cir. 1987). If the allegations give rise to something more than mere speculation that plaintiff has a right to relief, the claim may proceed. Twombly , 550 U.S. at 555.

Despite the narrow focus of a motion to dismiss, the parties barely mention the allegations contained in the Second Amended Complaint ("SAC"). Defendants apparently prefer to make arguments without reference to the actual allegations, while plaintiff throws up facts that are untethered to any particular legal claim and may or may not be asserted in the SAC. In addition, defendants regularly argue that a claim should be dismissed because plaintiff has failed to "prove" it. The question for the Court is whether the facts alleged in the SAC sufficiently state a "plausible" ground for relief. Twombly , 550 U.S. at 570. It is with that question in mind that the Court has reviewed the SAC and the memoranda, declaration, and exhibits submitted by the parties.


In August 2006, plaintiff and her then-husband borrowed $391, 000 from Taylor, Bean & Whitaker. In addition to a promissory note, plaintiff signed a Deed of Trust identifying Taylor, Bean & Whitaker as the lender, Old Republic Title, Ltd., as the trustee, and Mortgage Electronic Registration Systems, Inc. ("MERS"), as the lender's nominee to hold beneficiary status. Dkt. # 34-1 at 123. Plaintiff fell behind on the payments in 2010, and a Notice of Default was issued by defendant Northwest Trustee Services, Inc. ("NWTS") on behalf of defendant Cenlar on August 27, 2012. Dkt. # 34-1 at 4. The notice identified Freddie Mac as the owner of the loan and Cenlar as the loan servicer.[1] Plaintiff alleges that, pursuant to Freddie Mac's document retention procedures, a third-party had physical possession of the original signed promissory note at all relevant times, such that neither Cenlar nor NWTS had the power to initiate or pursue a nonjudicial foreclosure under the DTA. In addition, plaintiff alleges that NWTS imposed "Trustee's fees" in the Notice of Default, despite the fact that NWTS had not yet been appointed as successor trustee, and that the fees were not authorized, were unfair and deceptive, and were not in good faith.

Plaintiff sent requests for information to both Cenlar and defendant Bayview Loan Servicing, LLC. There was no response from Bayview and plaintiff was unsatisfied with Cenlar's response. Plaintiff hired an attorney to represent her and participated in mediation with Cenlar under Washington's Foreclosure Mediation Program. RCW 61.24.163. On October 3, 2012, Cenlar signed a document by which MERS purported to appoint NWTS as successor trustee. Dkt. # 34-1 at 50. Defendant Morris affixed her notary seal to the appointment without certifying that she was familiar with the person who signed the document or had ascertained his right to make the appointment on MERS' behalf. Two days later, defendant Dobron signed a Beneficiary Declaration in her role as an Assistant Secretary of Cenlar, attesting that Cenlar was in possession of the original promissory note. Dkt. # 34-1 at 12.[2] A similar document was created on October 16, 2012. Dkt. # 34-1 at 14.

On November 21, 2012, defendant Dobron signed an "Assignment of Deed of Trust, " this time as an Assistant Secretary of MERS. The assignment conveys MERS' interest in the deed of trust to Cenlar. Dkt. # 34-1 at 52. Defendant Morris notarized the document.[3] Both the assignment and the appointment of successor trustee were recorded in early December 2012. Plaintiff alleges that NWTS regularly prepares and records documents in MERS' name, improperly using the servicer's employees for such purposes. SAC at ¶ 30.

Plaintiff was able to negotiate a permanent loan modification in January 2013, effectively bringing the loan current and clearing the default. She filed this lawsuit in April of that year, alleging multiple misrepresentations and improprieties in the way defendants initiate and pursue nonjudicial foreclosures in general, and hers in particular. In December 2013, Cenlar levied a charge of $1, 261.42 in attorney's fees and costs against plaintiff's mortgage account. SAC at ¶ 37. Plaintiff contested the charge by letter dated December 29, 2013. Dkt. # 60-1 at 32-35. Over the next few months, Cenlar acknowledged receipt of her inquiry and clarified the nature of her request, but failed to provide an explanation or authorization for the disputed fees. Dkt. # 60-1 at 37-43. Between January 16, 2014, and March 6, 2014, plaintiff's monthly mortgage payments varied greatly and included thousands of dollars of attorney's fees. See, e.g., Dkt. # 60-1 at 52. Plaintiff sent another notice of error and request for information. Cenlar did not respond. Based on the statements made in its motion, it appears that Cenlar is charging plaintiff for the attorney's fees and costs it is incurring in this matter.


A. Deed of Trust Act ("DTA), RCW 61.24 et seq.

Plaintiff alleges that Cenlar, with the help of defendants NWTS, MERS, Dobron, and Morris, initiated nonjudicial foreclosure proceedings, including the appointment of NWTS as successor trustee and the issuance of the Beneficiary Declarations, when it did not have actual possession of the note and therefore lacked statutory authority. Defendants argue that, even if true, plaintiff cannot state a claim under the DTA because a foreclosure sale never took place. Dkt. # 82 at 5-6.[4] The Washington state courts have expressly rejected that argument, finding that the legislature intended to provide a cause of action for damages for DTA violations and that nothing in the statute requires that the violation result in the wrongful sale of the property. Walker v. Quality Loan Serv. Corp. , 176 Wn.App. 294, 308-12 (2013) (rejecting the analysis and conclusions of Vawter v. Quality Loan Serv. Corp. of Wash. , 707 F.Supp.2d 1115, 1123 (W.D. Wash. 2010)). See also Bavand v. Onewest Bank, F.S.B. , 176 Wn.App. 475, 496 (2013). Plaintiff alleges that the initiation of foreclosure proceedings diminished the value of her property and plaintiff's credit rating and disturbed plaintiff's privacy and quiet enjoyment of her home insofar as "investors, speculators and others" believed her home was up for grabs and began physically monitoring the property. These allegations state a plausible claim for relief under the DTA.[5]

B. Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. § 2601 et seq.

Plaintiff alleges that Cenlar violated § 2605(e)(2) of RESPA when it failed to timely and fully respond to a written request for information regarding the identity of both the owner and actual holder of the original promissory note. Dkt. # 60-1 at 76.[6] Plaintiff alleges that Cenlar's failure to respond, coupled with its continuing efforts to collect a challenged indebtedness, caused her emotional distress and other damages. Plaintiff also alleges that Cenlar engaged in a pattern of failing to respond to qualified written requests for information. The record does not support this claim. Cenlar acknowledged plaintiff's request on January 7, 2014, requested additional time in which to respond on February 10, 2014, and identified Freddie Mac as the owner and Cenlar as the servicing agent and beneficiary on February 24, 2014. Dkt. # 60-1 at 37, 39-40, and 42-43. There is no indication that plaintiff sent more than one request for this information to Cenlar, making her allegations of a pattern wholly ...

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