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Terhune v. North Cascade Trustee Services, Inc.

Court of Appeals of Washington, Division 2

August 13, 2019

ROBERT C. TERHUNE and TARA TERHUNE, husband and wife; and EQUITY GROUP NWEST LLC, a Delaware Limited Liability Company, Appellant,
v.
NORTH CASCADE TRUSTEE SERVICES, INC., a Washington corporation; Defendant, U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, a National Association; CALIBER HOME LOANS, INC., a corporation; DOE DEFENDANTS 1-10, inclusive, Respondents.

          MAXA, C.J.

         Robert and Tara Terhune and their closely held company Equity Group NWest (collectively, the Terhunes) appeal the trial court's order granting summary judgment in favor of U.S. Bank Trust (U.S. Bank) and Caliber Home Loans (Caliber).

         In 2008, the Terhunes defaulted on a loan secured by a deed of trust on their home and in early 2009 received notices that their obligations on their promissory note would be accelerated if they did not cure the default. Caliber issued a notice of trustee's sale for the home on U.S. Bank's behalf in 2016, and the Terhunes filed a lawsuit to enjoin the foreclosure and to quiet title to their home. The Terhunes argued that the promissory note had been accelerated in 2009, which started the six-year statute of limitations. Therefore, they claimed that the statute of limitations period had expired before U.S. Bank's foreclosure action. The Terhunes also argued that U.S. Bank was not authorized to foreclose because there was no evidence that U.S. Bank was the holder of the note.

         We hold that (1) the statute of limitations did not bar the foreclosure action because there was no clear and unequivocal acceleration of the promissory note; (2) the evidence established that U.S. Bank was the holder of the Terhunes' promissory note and the Terhunes failed to establish a genuine issue of fact on this question, and therefore U.S. Bank had authority to foreclose on the deed of trust; and (3) the trial court did not err in denying the Terhunes' motion for reconsideration.

         Accordingly, we affirm the trial court's orders granting summary judgment in favor of U.S. Bank and Caliber and denying the Terhunes' motion for reconsideration.

         FACTS

         Promissory Note

         On January 8, 2008, the Terhunes executed a promissory note for $1, 499, 999 in favor of Countrywide Bank (Countrywide). The note was secured by a deed of trust on the Terhunes' home in Lake Tapps. The note required the Terhunes to make payments of $8, 124.99 on the first day of every month beginning on March 1, 2008. The maturity date of the note was February 1, 2038.

         The note stated that the Terhunes would be in default if they failed to make a monthly payment on the due date. The note also included an acceleration clause, which stated,

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of Principal that has not been paid and all the interest that I owe on that amount.

Clerk's Papers (CP) at 96.

         The deed of trust stated that the lender must give written notice before accelerating the note obligations and that the notice must specify that "failure to cure the default on or before the date specified in the notice may result in acceleration." CP at 109 (bolding omitted). The deed of trust further provided that if the default was not cured on or before the date specified in the notice, "Lender at its option may require immediate payment in full of all sums" secured by the deed of trust. CP at 109 (bolding omitted).

         Default and Notice of Intent to Accelerate

         The Terhunes made monthly payments on the mortgage from March 2008 through October 2008. On December 17, after the Terhunes failed to make the November and December payments, Countrywide sent them a Notice of Intent to Accelerate. The notice stated that the loan was in default and that the Terhunes had until January 16, 2009 to cure the default by paying the two missed payments plus late charges. The notice also stated that if the default was not cured, "the mortgage payments will be accelerated with the full amount remaining." CP at 158.

         The Terhunes made the November payment, but did not make the December payment and failed to make the January 2009 payment. On January 16, 2009, Countrywide sent a second Notice of Intent to Accelerate. The notice stated that the loan was in default and that the Terhunes had until February 15 to cure the default by paying the two missed payments plus late charges. The notice again stated that if the default was not cured, "the mortgage payments will be accelerated with the full amount remaining." CP at 161.

         The Terhunes made the December payment, but they did not make the January 2009 payment and failed to make the February payment. On February 17, 2009, Countrywide sent a third Notice of Intent to Accelerate. The notice stated that the loan was in default and that the Terhunes had until March 19 to cure the default by paying the two missed payments plus late charges. The notice stated, "If the default is not cured on or before March 19, 2009, the mortgage payments will be accelerated with the full amount remaining." CP at 164.

         The Terhunes failed to make any further payments on the loan. However, there is no evidence that Countrywide provided any formal notice to the Terhunes that the loan actually had been accelerated.

         2010 Foreclosure Action

         In November 2009, BAC Home Loans Servicing, LP (BAC) sent the Terhunes a notice stating that BAC was servicing their loan and that their account was seriously delinquent. The notice stated that the past due amount was $86, 382. In March 2010, BAC sent the Terhunes a notice of default stating that the total amount in arrears was $158, 188.86.

         In August 2010, the trustee of the deed of trust sent the Terhunes a notice of foreclosure, which stated that their property would be sold in December if their default was not cured. The notice stated that the amount in arrears was $216, 503.61, and that the Terhunes had until November 22 to cure the default by paying all accrued charges that by that time were estimated to be $256, 210.39. The trustee also recorded a notice of trustee's sale for December 3, 2010, which showed that the amount in arrears was $216, 611.75.

         In November, the Terhunes filed a lawsuit against BAC and others seeking, among other relief, an injunction to prevent the trustee's sale and to quiet title to their home. The Terhunes' lawsuit eventually was dismissed. But there is no evidence that the trustee continued to pursue foreclosure at that time.

         Transfers of Note/Deed of Trust

         In March 2015, LSF9 Master Participation Trust notified the Terhunes that it had purchased their loan. The Trust's mailing address was listed as "c/o Caliber Home Loans, Inc." CP at 551. On June 4, Caliber notified the Terhunes that it was the new servicer of the loan. In a June 5 letter, Caliber notified the Terhunes that the creditor on the loan was LSF9 Master Participation Trust and that their total debt was $2, 292, 209.26. However, the letter stated, "We are not requesting that you pay the entire loan balance." CP at 187.

         In September 2015, Bank of America (as successor by merger to BAC) assigned its beneficial interest in the deed of trust to U.S. Bank, as trustee for LSF9 Master Participation Trust. On October 7, a representative of Caliber signed a declaration referencing the Terhunes' loan and stating that "U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST is the beneficiary . . . and actual holder of the promissory note or other obligation secured by the deed of trust." CP at 559. Above the signature line the declaration stated, "U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust, by Caliber Home Loans, Inc., as its attorney in fact." CP at 559. The document was signed by a person who listed her title as "authorized signatory." CP at 559.

         2016 Foreclosure Action and Lawsuit

         In December 2015, the trustee of the deed of trust sent the Terhunes a notice of default, which stated that U.S. Bank was the creditor on the loan, Caliber was the servicer of the loan, and the Terhunes owed $732, 627.78 in overdue payments, late charges, and advances on the loan.

         On October 11, 2016, the trustee recorded a notice of trustee's sale for February 17, 2017. The notice stated that the total amount in arrears was $669, 729.11 and that the Terhunes had until February 6, 2017 to cure the default by paying that amount.

         On February 7, the Terhunes filed a lawsuit against U.S. Bank as trustee for LSF9 Master Participation Trust and Caliber[1] to enjoin the trustee's sale and to quiet title in their property.[2] The Terhunes claimed that the notice of trustee's sale was invalid because the statute of limitations to enforce the promissory note and deed of trust had expired, and that the trustee did not have the authority to initiate a trustee's sale because U.S. Bank was not the holder of the note.

         U.S. Bank and Caliber filed a joint summary judgment motion. They argued that the statute of limitations had not expired because the loan was never accelerated. In support of their summary judgment motion, U.S. Bank and Caliber submitted the declaration of Nathaniel Mansi, a Caliber employee. Mansi stated that Countrywide did not accelerate the Terhunes' loan, and that "[a]t no time has the Loan been accelerated." CP at 92. He also stated that Countrywide had endorsed the promissory note in blank and that U.S. Bank was the owner of and was in possession of the note. Mansi stated that he made his declaration based on personal knowledge and his review of Caliber's business records regarding the Terhune loan.

         The trial court granted the summary judgment motion. The Terhunes filed a motion for reconsideration arguing that there was no evidence to support the trial ...


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