United States District Court, W.D. Washington, Seattle
ROBIN D. HARTLEY, et al., Plaintiffs,
BANK OF AMERICA, N.A., et al., Defendants.
ORDER GRANTING IN PART RCS' MOTION TO
S. Lasnik United States District Judge
matter comes before the Court on the “Fed. R. Civ. P.
12(b)(6) Motion of Defendant Residential Credit Solutions,
Inc.” Dkt. # 15. Plaintiffs filed this lawsuit against
a number of lenders, loan servicers, trustees, and other
banking institutions alleging technical errors and illegal
acts that delayed plaintiffs' ability to modify their
home loan and caused damage. Residential Credit Solutions
(“RCS”) seeks dismissal of eight of the claims
asserted, arguing that they are not plausible based on the
facts alleged. Having reviewed the complaint, the attached
exhibits, and the memoranda submitted by the parties,
Court finds as follows:
March 2006, plaintiff Robin Hartley executed a promissory
note for $500, 800.00, payable to the order of First Magnus
Financial Corp. Decl. of Douglas A. Johns (Dkt. # 9), Ex.
The note was secured by a deed of trust on real property
located at 17134 111th Ave. NE, Bothell, Washington.
Id., Ex. 3. The deed of trust lists First Magnus as
the lender, Stewart Title as the trustee, and Mortgage
Electronic Registration Systems, Inc. (“MERS”) as
both the beneficiary of the trust and the
“nominee” for the lender. Id.
began having trouble making their mortgage payments in 2008.
At the time, Countrywide Home Loans Servicing LP was
servicing plaintiffs' mortgage and communicated with them
regarding amounts past due and its intent to accelerate the
loan. Id., Exs. 4, 5, and 30. On or about April 29,
2009, Robin Hartley and BAC Home Loans Servicing, LP
(identifying itself as the lender) agreed to modify the loan,
amending and supplementing the original note and deed of
trust to increase the principal balance to $525, 243.52 and
to reduce the annual interest rate. Robin Hartley signed the
Loan Modification Agreement on May 19, 2009. Id.,
Ex. 6. The modification was not countersigned until three
years later, by which time BAC Home Loans Servicing, LP had
merged into Bank of America, N.A. Bank of America executed
the agreement on September 10, 2012. Id., Ex. 7.
made their last payment on the loan in July 2009.
April 2012, MERS purportedly assigned its interests as
beneficiary of the deed of trust to Bank of New York Mellon,
as trustee for certain certificate holders (hereinafter,
“BNYM”). In January 2013, a law firm acting on
behalf of an unidentified “Deed of Trust
Beneficiary” notified plaintiffs that they were in
default. The notice identified BNYM as the owner of the note
and Bank of America as the servicer. Plaintiffs requested
mediation, and the matter was referred by the Washington
Department of Commerce. Months passed while Bank of America
decided whether or not it wanted to pursue the notice of
default, pursue mediation, and/or offer a loan modification.
Id., Ex. 30. Whatever efforts Bank of America was
prepared to make were cut off when the servicing of the loan
was transferred to RCS in or before September 2013.
Id., Exs. 12, 13, and 30. RCS promptly notified
plaintiffs that they were in default and that RCS intended to
accelerate the loan. Id., Ex. 30. The first
mediation session was held on March 31, 2014.
2014, BNYM appointed Northwest Trustee Services, Inc.,
(“NWTS”) as the successor trustee. NWTS issued
another Notice of Default, which caused plaintiffs'
counsel to file another request for mediation. Despite the
first and second mediation requests, NWTS took the next step
toward foreclosure by issuing a Notice of Trustee's Sale
on September 4, 2014. Id., Ex. 17. A week later, the
mediator notified the parties that the second referral from
the Department of Commerce was in error because the mediation
process was still underway: the second request for mediation
was withdrawn (Id., Ex. 30), and NWTS discontinued
the trustee's sale (Id., Ex. 18).
more mediation sessions were held on March 10, 2015, and May
22, 2015. The mediator ultimately concluded that the
Beneficiary had not participated in mediation in good faith
under RCW 61.24.163(14) and (16). Id., Ex. 29. The
mediator specifically found that:
[T]he practice and behavior of the Beneficiary servicers
(first Bank of America and subsequently Residential Credit
Servicing) seem out of compliance with the provisions of the
[Washington State Foreclosure Fairness Act]. There was
considerable dysfunction with regard to instructions
delivered to their respective counsel/representatives as well
as a curious lack of responsiveness given the requests by
their counsel for guidance and direction. There [w]as also
multiple and confusing communication from the
[Beneficiary]/servicers directly to the Borrowers. . . . In
this particular case the counsels/representatives for the
beneficiary sought to move the process along but were stymied
in their efforts by their clients. . . . For a mediation
process to extend for more than two years by virtue of two
major transfers (one as to servicer and a second at a later
date to a different counsel) by the Beneficiary has
definitely disadvantaged the Borrower's right to a timely
and fair hearing whilst in mediation . . . .
Id., Ex. 29.
November 16, 2015, plaintiffs' counsel sent four separate
letters to RCS seeking information, namely:
(1) the identity of the owner and servicer(s) of the loan, a
copy of the loan documents, and information regarding whether
the loan is subject to recourse or an indemnification
agreement (Id., Ex. 31);
(2) an itemized cure amount and a pay off statement
(Id., Ex. 33);
(3) information regarding available modification programs,
borrower qualifications, and program ...