United States District Court, W.D. Washington, Seattle
RHETT E. TAYLOR and LAURIE D. TAYLOR, Plaintiffs,
PNC BANK, NATIONAL ASSOCIATION, Defendant.
C. COUGHENOUR UNITED STATES DISTRICT JUDGE
matter comes before the Court on Defendant’s motion to
dismiss (Dkt. No. 8). Having thoroughly considered the
parties’ briefing and the relevant record, the Court
finds oral argument unnecessary and hereby DENIES the motion
for the reasons explained herein.
are the record owners of real property located at 6228 165th
Pl. SW, Lynnwood, WA 98037-2725 (the “property”).
(Dkt. No. 1 at 2.) On March 6, 2007, Plaintiffs borrowed
$150, 000 from National City Bank on a home equity line of
credit (the “HELOC loan”). (Id.)
Plaintiffs executed an equity reserve agreement and a deed of
trust that was recorded against the property. (Id.
at 2–3; see Dkt. Nos. 1-3 at 2–7, 1-4 at
2–8.) The equity reserve agreement reflected an
“open-end line of credit” whose “total
amount will be required to be repaid in two hundred forty
(240) equal monthly payments . . . .” (Dkt. No. 1-3 at
2, 4.) The deed of trust established a lien against the
property and had a maturity date of March 6, 2037. (Dkt. No.
1-4 at 2–3.) The listed events of default under the
deed of trust included fraud, failure to make a timely
payment, and Plaintiffs taking any action or inaction
adversely affecting the property or Defendant’s rights
in the property. (Id. at 5.) Under the deed of
trust, Defendant’s remedies for an event of default
included acceleration of the debt and foreclosure of the
property. (Id.) The HELOC loan is currently owned by
Defendant and had a balance of $152, 885.47 on June 11, 2019.
(Dkt. No. 1 at 3.)
February 11, 2011, Plaintiffs filed a Chapter 7 bankruptcy
petition in the U.S. Bankruptcy Court for the Western
District of Washington. (Id.) On May 23, 2011, the
bankruptcy court granted Plaintiffs a discharge pursuant to
11 U.S.C. §§ 727. (Id.; see Dkt.
No. 1-5 at 2.) On July 23, 2019, Plaintiffs filed their
complaint in this action seeking to quiet title to the
property. (Dkt. No. 1.) Plaintiffs contend that
Washington’s six-year statute of limitations on actions
to enforce promissory notes and accompanying deeds of trust
has run on the HELOC loan following the bankruptcy
court’s discharge in May 2011, and therefore they are
entitled to quiet title against Defendant. (Id. at
3–4.) Defendant moves to dismiss Plaintiffs’
complaint for failure to state a claim pursuant to Federal
Rule of Civil Procedure 12(b)(6). (Dkt. No. 8.)
Motion to Dismiss Legal Standard
Court may dismiss a complaint that “fail[s] to state a
claim upon which relief can be granted.” Fed.R.Civ.P.
12(b)(6). To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to state
a claim for relief that is plausible on its face.
Ashcroft v. Iqbal, 556 U.S. 662, 677–78
(2009). A claim has facial plausibility when the plaintiff
pleads factual content that allows the Court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged. Id. at 678. In addition, the
complaint may be dismissed if it lacks a cognizable legal
theory or states insufficient facts to support a cognizable
legal theory. Zixiang v. Kerry, 710 F.3d 995, 999
(9th Cir. 2013).
Statute of Limitations under Washington Law
Washington law, a promissory note and deed of trust are
written contracts that are subject to a six-year statute of
limitations. See Wash. Rev. Code § 4.16.040(1);
Cedar W. Owners Ass’n v. Nationstar Mortg.,
LLC, 434 P.3d 554, 559 (Wash.Ct.App. 2019). An action
“can only be commenced” within six years
“after the cause of action has accrued.” Wash.
Rev. Code § 4.16.005. The six-year statute of
limitations on a deed of trust accrues “when the party
is entitled to enforce the obligations of the note.”
Wash. Fed., Nat’l Ass’n v. Azure Chelan
LLC, 382 P.3d 20, 30 (Wash.Ct.App. 2016).
promissory note and deed of trust are payable in
installments, the six-year statute of limitations accrues for
each monthly installment from the time it becomes due.
Edmundson v. Bank of America, N.A., 378 P.3d 272,
277 (Wash.Ct.App. 2016) (citing Herzog v. Herzog,
161 P.2d 142, 145 (Wash. 1945)). In Edmundson, the
Washington State Court of Appeals ruled that the six-year
statute of limitations period for enforcing a deed of trust
payable in installments begins to accrue on each date that a
borrower defaults on a payment until the borrowers’
personal liability is discharged in a bankruptcy proceeding,
as after that point no future installment payments will be
due. 378 P.3d at 278. Washington and federal courts have
since followed the legal rule announced in
Edmundson. See Jarvis v. Fed. Nat’l Mortg.
Ass’n, 726 F.App'x 666, 667 (9th Cir. 2018)
(“The final six-year period to foreclose runs from the
time the final installment becomes due . . . [which] may
occur upon the last installment due before discharge of the
borrower’s personal liability on the associated
note”), aff’ing Jarvis v. Fed. Nat’l
Mortg. Ass’n, No. C16-5194-RBL (W.D. Wash. 2017);
U.S. Bank NA v. Kendall, 2019 WL 2750171, slip op.
at 4 (Wash.Ct.App. 2019) (noting that although a deed of
trust’s lien is not discharged in bankruptcy, the
limitations period for an enforcement action nonetheless
“accrues and begins to run when the last payment was
due” prior to discharge); Hernandez v. Franklin
Credit Mgmt. Corp. et al., No. C19-0207-JCC, Dkt. No. 14
(W.D. Wash. 2019) (applying Edmundson to conclude
that creditors’ ability to enforce the underlying deed
of trust became time-barred six years after “the last
date an installment payment was due prior to”
equity reserve agreement and accompanying deed of trust were
installment contracts requiring Plaintiffs to make monthly
payments to service the HELOC loan. (See Dkt. Nos.
1-3, 1-4.) Plaintiffs received a Chapter 7 bankruptcy
discharge on May 23, 2011. (Dkt. No. 1 at 3.) Therefore, the
statute of limitations on Defendant’s ability to
enforce the deed of trust began to accrue on the last date an
installment payment was due prior to the discharge. See
Edmundson, 378 P.3d at 278. Defendant has not
established that it took any actions following the discharge
that could have tolled the six-year statute of limitations
under Wash. Rev. Code § 4.16.040(1); (see Dkt.
Nos. 8 at 2–3, 12 at 2–3). Therefore, as
Plaintiffs’ discharge occurred beyond the six-year
statute of limitations imposed by Wash. Rev. Code §
4.16.040(1), Defendant has not established that
Plaintiffs’ complaint to quiet title in the property
fails to state a claim upon which relief can be granted.
See Fed. R. Civ. P. 12(b)(6); Zixiang, 710
F.3d at 999.