Thomas F. Merry, Appellant ,
Northwest Trustee Services, Inc., et al., Respondents
Oral Argument April 29, 2015
Appeal from Chelan Superior Court. Docket No: 13-2-01255-8. Judge signing: Honorable Lesley A Allan. Judgment or order under review. Date filed: 05/01/2014.
Thomas F. Merry, pro se.
John A. McIntosh (of RCO Legal PS ); and Rebecca R. Shrader (of Bishop, White, Marshall & Weibel PS ), for respondents.
Authored by Laurel H. Siddoway. Concurring: Stephen M. Brown, Kevin M. Korsmo.
[188 Wn.App. 176] [¶1] Thomas Merry appeals the dismissal of a declaratory judgment action in which he sought to establish the priority of his deed of trust on a residential property after a trustee, claiming to act on behalf of Nationstar Mortgage LLC, commenced nonjudicial foreclosure. Relying on Bain v. Metropolitan Mortgage Group, Inc., [188 Wn.App. 177] 175 Wn.2d 83, 93, 285 P.3d 34 (2012), Mr. Merry contends that Nationstar had no enforceable deed of trust and that the promissory note it held had been rendered void. But Mr. Merry took no action to restrain the trustee's sale. After the sale was completed, Nationstar and the trustee successfully argued that Mr. Merry's interest was eliminated by the sale and he had waived any right to set it aside.
[¶2] Mr. Merry argues that recent decisions of the Washington Supreme Court and this court hold that waiver will not be applied to prevent a plaintiff from seeking to set aside a completed trustee's sale where the plaintiff demonstrates a failure to strictly comply with the requirements of Washington's deeds of trust act (DTA), chapter 61.24 RCW. We agree that Albice v. Premier Mortgage Services of Washington, Inc., 174 Wn.2d 560, 568, 276 P.3d 1277 (2012) and Schroeder v. Excelsior Management Group, LLC, 177 Wn.2d 94, 104, 297 P.3d 677 (2013) are controlling authority that if the conduct of a foreclosure sale does not strictly comply with the DTA, a court can set aside a sale if it would be inequitable under the circumstances and inconsistent with the goals of the DTA to apply the defense of waiver.
[¶3] But Mr. Merry relies on technical, formal, likely correctable and nonprejudicial violations of the DTA arising because Nationstar, and its predecessors in interest, were members of Mortgage Electronic Registration Systems Inc. (MERS), a privately-operated mortgage registry whose practices in creating and transferring beneficial interests conflicted with requirements of the DTA. While Bain recognized that those practices had the potential to prejudice Washington borrowers--particularly those needing to identify their lender to explore modification of their loans--Mr. Merry's claim is not that MERS's practices harmed him. It is instead that MERS's practices have somehow rendered void a bona fide, senior $235,000-plus obligation secured by the subject property.
[¶4] The long-standing elements of the doctrine of waiver are present: Mr. Merry received notice of his right to enjoin [188 Wn.App. 178] the trustee's sale, had actual knowledge that MERS had acted as an unlawful beneficiary under the deed of trust interest asserted by Nationstar, and failed to bring action to enjoin the sale. For that reason, and because it is not inequitable nor is it inconsistent with the goals of the DTA to apply waiver, we hold that the trial court properly applied waiver and dismissed Mr. Merry's complaint. We affirm.
FACTS AND PROCEDURAL BACKGROUND
[¶5] In 2007, Sharon Weirich borrowed $205,440 from Countrywide Home Loans
Inc. and executed a deed of trust on her real property located in Dryden, Washington, as security. The deed of trust identified Countrywide as the lender, Landsafe Title of Washington as the trustee, and MERS as " a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns." Clerk's Papers (CP) at 41. It stated, " MERS is the beneficiary under this Security Instrument." Id.
[¶6] In December 2011, MERS executed an assignment of deed of trust as " holder," transferring " all beneficial interest" under the 2007 Weirich-to-Countrywide deed of trust to Bank of America NA. CP at 61. The assignment was recorded in Chelan County on December 8, 2011.
[¶7] According to a notice of trustee's sale later filed in Chelan County, Northwest Trustee Services Inc., acting on behalf of Bank of America, mailed and personally served Ms. Weirich with a notice of default on October 31, 2012. The notice of default identified the owner of the note as the Federal National Mortgage Association (Fannie Mae) and identified Bank of America as the loan servicer.
[¶8] In November 2012, Bank of America, as " present beneficiary under [the Weirich-to-Countrywide] deed of trust," appointed Northwest Trustee as successor trustee under the deed of trust. CP at 66.
[¶9] Meanwhile, on the borrower's side of the transaction, and also in November 2012, Ms. Weirich executed a deed of [188 Wn.App. 179] trust to the appellant, Thomas Merry. According to its terms, it secured payment of a $68,000 promissory note. Ms. Weirich executed a power of attorney and assignment of legal claims to Mr. Merry in the same time frame.
[¶10] Shortly after these November dealings, Ms. Weirich received a notice of trustee's sale dated December 12, 2012, informing her that her property would be sold to satisfy her promissory note obligation to MERS, as nominee for Countrywide, which note had been assigned to Bank of America. The notice identified the date of the trustee's sale as April 19, 2013. The sale did not occur on that date, however, and the 120-day statutory timeline for conducting a sale following service of notice passed without any rescheduled sale. Ms. Weirich's arrears on her promissory note continued to grow.
[¶11] In May 2013, Bank of America executed an assignment, transferring its beneficial interest under the deed of trust together with the note to Nationstar. The assignment was recorded in Chelan County on June 6, 2013.
[¶12] On October 8, 2013, Northwest Trustee recorded an amended notice of trustee's sale in Chelan County, identifying the date of the trustee's sale as November 15, 2013. The notice indicated that over $235,000 was then owed on the note Ms. Weirich had given Countrywide in 2007. Although no evidence of service of the notice of trustee's sale is included in the record on appeal, the notice was required by the DTA to be served on Ms. Weirich, as grantor, and Mr. Merry, as holder of a junior deed of trust, at or about the same time. RCW 61.24.040(1)(b). Consistent with RCW 61.24.040(1)(f), which prescribes the form of notice, the notice of trustee's sale stated:
Anyone having any objection to the sale on any grounds whatsoever will be afforded an opportunity to be heard as to [188 Wn.App. 180] those objections if they bring a lawsuit to restrain the sale pursuant to RCW 61.24.130. Failure to bring such a lawsuit may result in a waiver of any proper grounds for invalidating the Trustee's sale.
CP at 81.
[¶13] Before the scheduled sale date, Mr. Merry commenced legal action against Northwest Trustee and Nationstar in Chelan County by serving both with a " Complaint to Declare Lien Priority, and to Declare Deed of Trust Void and Promissory Note Unenforceable." CP at 3. Among matters alleged by Mr. Merry's complaint were a number of technical violations of the DTA in the form of actions by entities who had been improperly designated or appointed or otherwise lacked authority.
[¶14] It is clear from Mr. Merry's pro se complaint that he was aware of the trustee's sale scheduled for November 15. His complaint stated that in response to a request for a true copy of the promissory note signed by Ms. Weirich, Northwest Trustee had provided her with a photocopy that appeared to bear Countrywide's endorsement in blank.
[¶15] The complaint sought the court's declaration that Northwest Trustee was not trustee at the time it issued the notice of default; that Nationstar lacked standing to enforce the note, initiate nonjudicial foreclosure, or appoint a substitute trustee; that Ms. Weirich's promissory note and deed of trust to Countrywide were unenforceable and void; that the note was a lost or stolen instrument; and that Mr. Merry's deed of trust was in first position on the property.
[¶16] Mr. Merry did not attempt to enjoin the trustee's sale of the property. After one brief postponement, Northwest [188 Wn.App. 181] Trustee proceeded with the sale on January 3, 2014, selling the property to Nationstar, which immediately conveyed its interest to Fannie Mae.
[¶17] Nationstar and Northwest Trustee then answered Mr. Merry's complaint, and in February Northwest Trustee moved for judgment on the pleadings under CR 12(c), arguing that Mr. Merry waived his right to challenge the completed sale by failing to seek an order restraining it.
[¶18] In March 2014, having reviewed the parties' briefing and documents referenced by Mr. Merry's complaint and attached to Northwest Trustee's motion, and having heard argument from the parties, the court granted the motion and dismissed the complaint with ...