United States District Court, W.D. Washington, Seattle
following Minute Order is made by direction of the Court, the
Honorable Thomas S. Zilly, United States District Judge:
Defendant's motion for partial summary judgment, docket
no. 28, is DENIED in part and DEFERRED in part, as follows:
Defendant's motion for summary judgment as to
plaintiffs' first, second, and fourth claims for breach
of contract, breach of the covenant of good faith and fair
dealing, and outrage or intentional infliction of emotional
distress, respectively, and as to plaintiffs' claim for
emotional distress damages, is DENIED. The Court is satisfied
that genuine disputes of material fact exist, and/or that
defendant is not entitled to judgment as a matter of law, as
to such claims.
Defendant's motion for summary judgment as to
plaintiffs' third claim for negligence and as to
plaintiffs' prayer for credit-related damages is DEFERRED
pending further briefing as set forth below.
Plaintiffs' motion for partial summary judgment, docket
no. 25, which relates to their first claim for breach of
contract and to the first four elements (i.e.,
unfair or deceptive act or practice, trade or commerce,
public interest, and injury to business or property) of their
fifth claim for violation of Washington's Consumer
Protection Act (“CPA”) is DEFERRED pending
further briefing as set forth below.
February 22, 2017, the parties shall file supplemental
briefs, not to exceed eighteen (18) pages in length, on the
Plaintiffs have asked the Court to take judicial notice of a
Stipulated Order for Permanent Injunction and Monetary
Judgment entered in Fed. Trade Comm'n v. Green Tree
Servicing LLC, Case No. 15-cv-2064 (D. Minn. Apr. 23,
2015) [hereinafter, “FTC Order”]. Defendant
objected on three grounds: (i) the request for judicial
notice was untimely; (ii) the request was improperly filed or
noted; and (iii) the FTC Order contains adjudicative facts of
which the Court may not take judicial notice. Defendant's
first contention lacks merit; the FTC Order was also attached
to the declaration of plaintiffs' counsel that
accompanied plaintiffs' motion for partial summary
judgment. Defendant's third argument relies on a false
premise; the FTC Order did not make factual findings,
rather imposed monetary penalties and future requirements on
defendant. See Ex. 6 to Vondra Decl. (docket no.
27-6). The Court is satisfied that defendant's second
objection is adequately addressed by allowing further
briefing by both parties, which should discuss, at a minimum
(i) whether the FTC Order is entitled to full faith and
credit, (ii) whether the steps taken after entry of the FTC
Order to foreclose on the Deed of Trust at issue violated the
FTC Order, (iii) if so, how such conduct relates to
plaintiffs' claims in this matter, and (iv) whether
defendant is estopped by the FTC Order from denying that the
loan modification agreement executed by plaintiffs in
December 2013 was effective and binding on defendant when it
began servicing the loan in January 2014.
Deed of Trust at issue listed Abacus Mortgage, Inc.
(“Abacus”) as the lender and Flagstar Bank, FSB
(“Flagstar”) as the trustee. See Ex. 2
to Raney Decl. (docket no. 26-2). When Abacus transferred
beneficial interest in the Deed of Trust to Flagstar in July
2013, see Recording No. 201307170389
Flagstar became both the trustee and the beneficiary,
seemingly in violation of RCW 61.24.020. Although Flagstar
transferred beneficial interest in the Deed of Trust to
defendant in May 2014, see Ex. 4 to Vondra Decl.
(docket no. 27-4),  the appointment of Quality Loan Service
Corporation of Washington (“QLS Corp.”) as
successor trustee was not recorded in Snohomish County until
March 2015. See Ex. 1 to Stip. Mot. (docket no. 15).
Thus, Flagstar appears to have been the trustee for the Deed
of Trust from its execution in March 2007 until QLS
Corp.'s substitution in March 2015. See RCW
61.24.010(2) (“Only upon recording the appointment of a
successor trustee in each county in which the deed of trust
is recorded, the successor trustee shall be vested with all
powers of an original trustee.”). The parties shall
address the effect, if any, of Flagstar's approximately
10-month-long dual position as trustee and beneficiary on (i)
the validity of the Deed of Trust at issue, (ii)
defendant's interests in the Deed of Trust, (iii) the
enforceability of the loan modification agreement executed by
plaintiffs in December 2013, and (iv) plaintiffs' claims
in this action.
Plaintiffs seek partial summary judgment as to their breach
of contract claim, specifically asking for a ruling that the
loan modification agreement they executed in December 2013
was binding on defendant when it began servicing the loan in
January 2014, and citing Corvello v. Wells Fargo Bank,
NA, 728 F.3d 878 (9th Cir. 2013), and Steadman v.
Green Tree Servicing, LLC, 2015 WL 2085565 (W.D. Wash.
May 5, 2015). Corvello, however, merely reversed the
grant of a Rule 12(b)(6) motion, and Steadman denied
in relevant part defendant's motion for summary judgment.
The parties shall address (i) whether, in light of the
procedural posture of Corvello and
Steadman, as well as Young v. Wells Fargo Bank,
N.A., 717 F.3d 224 (1st Cir. 2013), and Wigod v.
Wells Fargo Bank, N.A., 763 F.3d 547 (7th Cir. 2012),
such authorities can be used as support for summary judgment
in favor of plaintiffs, (ii) what law governs in this matter
as to the question of contract formation, and (iii) whether
such question is reserved for the trier of fact; see
Keystone Land & Dev. Co. v. Xerox Corp., 152 Wn.2d
171, 178 n.10, 94 P.3d 945 (2004) (“Whether there was
mutual assent is normally a question of fact for the
9:00 a.m. on February 23, 2017, the parties shall provide
copies of their supplemental briefs, along with a copy of
this Minute Order, to Judge Bruce W. Hilyer (Ret.) in
connection with the mediation scheduled for February 27,
2017. The pending cross-motions for partial summary judgment,
docket nos. 25 and 28, are RENOTED to March 3, 2017. If the
parties reach a settlement, they shall immediately, and no
later than 4:00 p.m. on March 3, 2017, notify Karen Dews by
telephone at (206) 370-8830.
Clerk is directed to send a copy of this Minute Order to all
counsel of record.
 Indeed, the FTC Order explicitly
indicated that defendant neither admitted nor denied the
allegations in the operative complaint, except as necessary