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Hartley v. Bank of America, N.A.

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

March 7, 2017

ROBIN D. HARTLEY, et al., Plaintiffs,
BANK OF AMERICA, N.A., et al., Defendants.


          Robert S. Lasnik United States District Judge

         This matter comes before the Court on the “Partial Motion to Dismiss Plaintiffs' Complaint Pursuant to FRCP 12(b)(6) by Defendants Ditech Financial, LLC, Bank of America, N.A., and CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-8.” Dkt. # 19.[1] 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. Defendants seek dismissal of eight of the claims asserted, arguing that they are not plausible based on the facts alleged. In addition, they seek dismissal of all claims but one claim asserted against MERS. Having reviewed the complaint, the attached exhibits, and the memoranda submitted by the parties, [2] the Court finds as follows:


         In 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. 2.[3] 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.

         Plaintiffs 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 endorsed the agreement on September 10, 2012. Id., Ex. 7.

         Plaintiffs made their last payment on the loan in July 2009.

         In April 2012, MERS purportedly assigned its interests as beneficiary of the deed of trust to Bank of New York Mellon, as trustee for the certificate holders of CWMBS. (hereinafter, “CWMBS”). Id., Ex. 9. 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 CWMBS as the owner of the note and defendant Bank of America as the servicer. Id., Ex. 10. 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.

         In July 2014, CWMBS 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).

         Two 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.

         On 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 ...

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