United States District Court, W.D. Washington, Seattle
ORDER GRANTING MERS'S MOTION TO DISMISS AND
CAPITAL ONE'S MOTION FOR SUMMARY JUDGMENT
Robert S. Lasnik United States District Judge.
matter comes before the Court on a motion to dismiss (Dkt.
#15) filed by defendant Mortgage Electronic Registration
Systems, Inc. (“MERS”) and on a motion for
summary judgment (Dkt. # 15) filed by defendant Capital One,
N.A. (“Capital One”). Having reviewed the
memoranda, declarations, and exhibits submitted by the
parties, the Court finds as follows:
the third lawsuit involving the 2012 foreclosure of the
residential property located at 2222 West Lake Sammamish
Parkway NE, in Redmond, Washington (“the
Property”). Plaintiff is a self-settled trust
established by Gary and Diane Alexander (collectively,
“the Alexanders”) for the benefit of their adult
sons. (Dkt. #1), ¶ 2; (Dkt. #1), Ex. A-3. In 2007, the
Alexanders borrowed three million dollars from Chevy Chase
Bank, F.S.B. (“Chevy Chase”) through an
Adjustable Rate Note (“Note”). The loan was to be
used to finance initial construction of the Alexanders'
home. In addition to the Note, the Alexanders signed a
notarized Deed of Trust (DOT), authorizing a trustee to sell
the Property if the Alexanders defaulted on their obligations
under the Note.
first quarter of 2009, Capital One merged with Chevy Chase.
Several months later, in October 2009, the Alexanders stopped
making payments on the Note. For the next thirty-two months,
the Alexanders continued to live on the Property without
taking any action to cure the default. On July 27, 2012, the
Alexanders received notice that the Property would be sold.
At the trustee's sale on November 30, 2012, Capital One
bought the Property for $2, 491, 148.85. In spite of the
foreclosure and trustee's sale, the Alexanders continued
living on the Property without making any rent payments or
payments on the Note, which was in default in excess of $561,
000 at the time of the trustee's sale.
order to delay their impending eviction, on November 21,
2012, the Alexanders filed suit pro se in Washington
superior court against Capital One, MERS, and a number of
other defendants. Alexander v. Capital One, et al.,
(“Alexander I”), No. 12-2-37609-3 (Aug.
21, 2013). The Alexanders also engaged in a number of other
delay tactics while Alexander I was pending, such as
filing for bankruptcy the day before a summary judgment
hearing in order to trigger the automatic stay provision
available to parties engaged in bankruptcy proceedings.
Alexander v. Capital One, et al,
(“Alexander II”), No. 13-2-27723-9, slip
op. ¶ 15(a) (June 17, 2014). On July 30, 2013 the
Alexanders retained an attorney and submitted a second
complaint, Alexander II, voluntarily withdrawing the
previous action, which was dismissed on August 21, 2013. The
Alexander II complaint, filed against current
defendants Capital One and MERS, among others, alleged the
following causes of action: Wrongful Foreclosure, Fraud,
Slander of Title, Negligence, violation of the Consumer
Protection Act (CPA), Criminal Profiteering, and Declaratory
summary judgment, the Alexander II court dismissed
all claims against Capital One and MERS. The court also
granted the defendants attorneys' fees and costs pursuant
to a provision of the DOT and “for the baseless filing
of the Complaint in violation of [Washington Civil Rule
11].” No. 13-2-27723-9, slip op. at 7. The court
concluded that “[t]he entirety of [P]laintiffs'
lawsuit against defendants was frivolous and advanced without
reasonable cause because it could not be supported by any
rational argument on the law or facts….” No.
13-2-27723-9, slip op. ¶¶ 26-27. Attorneys'
fees and costs were awarded in the amount of $79, 526.63.
Id. ¶ 28. The trial court's decision was
affirmed on appeal. Alexander v. Capital One, Nos.
71952-1-I, 72350-2-I, 2015 WL 7736383 (Wash.Ct.App. Nov. 30,
instant lawsuit closely resembles the previous two, with
Integrity Trust now substituted as Plaintiff. The operative
facts are the same, but there are three new causes of action
in addition to the claims previously brought in state court.
Plaintiff now brings a claim to effectuate rescission under
the Truth in Lending Act (TILA), as well as claims that
Defendants violated the Fair Debt Collection Act (FDCA) and
support of its TILA claim, Plaintiff attached a document to
its Complaint entitled “Notice of Revocation of Power
of Attorney” that was not cited in the earlier actions.
(Dkt. #1, Ex. B). The notice-signed by Gary Alexander-is
fairly incomprehensible and makes no reference to TILA.
Instead, the notice purports to “revoke, rescind and
terminate all my signatures relating to any/all said deeds,
notes, and agreement's from their inception…and
hereby revoke, terminate and rescind all Powers of
Attorney…previously assigned by me…as such
pertains to any property, real or personal, Promissory
Note/Loan/Deed of Trust….” Id. at 5.
Plaintiff claims that the Notice is a proper notice of
rescission under section 1635 of the Truth in Lending Act.
(Dkt. #1), ¶¶ 21-22; 15 U.S.C. § 1635.
now moves to dismiss Plaintiff's claims for lack of
proper service and failure to allege sufficient facts to
support a claim against MERS. Capital One moves for summary
judgment, arguing that Plaintiff's claims are barred by
the doctrine of claim preclusion; that the TILA rescission
was invalid; that Plaintiff's FDCA claim fails because
Capital One is not a “debt collector” under the
terms of the Act and a nonjudicial foreclosure proceeding is
not a collection of a debt; that Plaintiff's wrongful
foreclosure claim is barred by the statute of limitations;
that Plaintiff's CPA claim is not supported by evidence
of an unfair or deceptive act or practice by Capital One; and
that there is no justiciable controversy to sustain
Plaintiff's Declaratory Judgment claim. In turn,
Plaintiff argues that claim preclusion does not apply since
this is the first action by Integrity Trust against these
defendants; that the case is not ripe for dispositive motion
practice; that material facts are in dispute; and that
Defendants are time-barred from challenging the alleged TILA
rescission. Because the Court finds that Plaintiff has not
served MERS and is barred from bringing its present claims by
the doctrine of claim preclusion, the Court does not address
the parties' other arguments.
MERS's Motion to Dismiss
MERS moves to dismiss for lack of service and failure to
state a claim against MERS. (Dkt. #15), at 2. If Plaintiff
has not effectuated proper service as required under Federal
Rule of Civil Procedure 4, the Court has no jurisdiction and
may not consider the parties' remaining arguments.
See Carter v. Champion Int'l, 911 F.2d 737 (9th
Cir. 1990) (“Defendants must be served in accordance
with Rule 4(d) of the Federal Rules of Civil Procedure or
there is no personal jurisdiction.”). The Court
therefore addresses the service of process argument first.
service is challenged, plaintiffs bear the burden of
establishing that service was valid under Rule 4.”
Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir.
2004). Rule 4 requires the defendant to be served within 90
days after the complaint is filed, or the court “must
dismiss the action without prejudice against that defendant
or order that service be made within a specified time.”
Fed.R.Civ.P. 4(m). In the Ninth Circuit, Rule 4 may be
liberally construed so that failure to comply does not
require dismissal of the complaint if: “(a) the party
that had to be served personally received actual notice, (b)
the defendant would suffer no prejudice from the defect in
service, (c) there is a justifiable excuse for the failure to
serve properly, and (d) the plaintiff would be severely
prejudiced if his complaint were dismissed.”