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Hankins v. U.S. Prof-2014-S2 Legal Title Trust

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

May 9, 2017

KIM M HANKINS, Plaintiff,
US PROF-2014-S2 LEGAL TITLE TRUST, et al. Defendants.


          Ronald B. Leighton United States District Judge

         THIS MATTER is before the Court on Defendants U.S. ROF II Legal Title Trust 2015-1 and U.S. PROF-2014-S2 Legal Title Trust's Motion to Dismiss Plaintiff Kim Hankins' Complaint [Dkt. #7] and Defendant Northwest Trustee Services, Inc.'s Motion to Dismiss Hankins' Complaint [Dkt. #9]. Hankins pro se sued Defendants to stop their foreclosure of her property. She seeks (1) a declaratory ruling that ROF Trust, PROF Trust, and NWTS cannot non-judicially foreclose on her property in violation of the Washington Deed of Trust Act, and (2) quiet title to the property as against U.S. ROF and U.S. PROF because they commenced the foreclosure process over six years after she defaulted on her loan. See Dkt. #11 (Hankins Response) at 3; see also Dkt. #1 (Complaint). All Defendants argue Hankins' DTA claim is premature under Frias v. Asset Foreclosure Services, Inc. at al., 181 Wn.2d 412, 334 P.3d 529 (2014), and Titus v. Wells Fargo Bank, N.A., 2016 U.S. Dist. LEXIS 26271, *10 (W.D. Wash. March 2, 2016), which explain that DTA claims are non-justiciable unless brought after a foreclosure sale has taken place. U.S. ROF and U.S. PROF argue the limitations period to foreclose on Hankin's property has not passed because they did not accelerate her loan repayments. Hankins argues her DTA claim is timely because she only seeks declaratory relief, and ROF Trust and PROF Trust automatically accelerated her debt's maturation by commencing foreclosure proceedings.

         I. DISCUSSION

         A. Factual Background.

         The facts are undisputed. Hankins bought her Shelton, WA property in 2006. Golf Savings Bank loaned her $238, 500.00 secured by two deeds of trust: one for $212, 000.00 and a junior one for $26, 500.00. Hankins defaulted on the senior loan in November 2009, and has since remained in default.

         NWTS was appointed successor trustee in July 2016. NWTS issued Hankins a notice of default a few days later and listed PROF Trust as the senior loan's beneficiary. In August 2016, PROF Trust informed Hankins it had sold the senior loan to ROF Trust. NWTS recorded notice of a trustee's sale of the property on November 22, 2016. It set a sale date of March 24, 2017.

         Hankins sued in state court in January 2017. Defendants removed the case to this Court.

         B. Standard of Review.

         Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff's complaint must allege facts to state a claim for relief plausible on its face. See Aschcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). A claim has “facial plausibility” when the party seeking relief “pleads factual content that allows the Court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “[A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and footnotes omitted). This requires a plaintiff to plead “more than an unadorned, the-defendant-unlawfully-harmed-me-accusation.” Iqbal, 129 S.Ct. at 1949 (citing Twombly).

         On a 12(b)(6) motion, “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990). However, where the facts are not in dispute, and the sole issue is whether there is liability as a matter of substantive law, the Court may deny leave to amend. See Albrecht v. Lund, 845 F.2d 193, 195-96 (9th Cir. 1988).

         C. DTA Claim.

         Hankins identifies a number of alleged deficiencies regarding the assignments of interests, appointments, and procedures used to initiate a nonjudicial foreclosure under the DTA. She claims the foreclosure is in the name of an improper beneficiary, the deed of trust was improperly split from the note securing her debt, the deed of trust was improperly assigned, the trustee does not have proof that the beneficiary is properly holding her note, the loan servicer sent her dishonest communications about meeting prior to foreclosure, the limitations period to foreclose on her property has expired, and the trustee failed to investigate these claims in good faith. Hankins seeks a declaration that Defendants violated the DTA and an injunction. Defendants argue Hankins' claims are premature because they are non-justiciable until a foreclosure sale has occurred, and one has not. They rely on Frias and Titus.

         “Under Washington law, a foreclosure sale is a prerequisite to bringing a DTA claim.” Titus, 2016 U.S. Dist. LEXIS 26271, at *10 (citing Frias, 334 P.3d 529). “[T]here is no actionable, independent cause of action for monetary damages under the DTA based on DTA violations absent a completed foreclosure sale.” Frias, 334 P.3d at 537. A plaintiff also may not “seek injunctive relief by complaint [under the DTA] without first following relevant state law provisions, such as RCW 61.24.130”-the sole method to contest and enjoin a foreclosure sale. Titus v. Wells Fargo Bank, N.A., No. 3:15-CV-05690-RJB, 2016 WL 807806, at *4 (W.D. Wash. Mar. 2, 2016) (citing CHD, Inc. v. Boyles, 138 Wn.App. 131, 137 (2007)).

         A foreclosure sale has not yet occurred, so the Court agrees with the Defendants that Hankins' allegations they violated the DTA are premature. Her allegations support no plausible claim ...

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