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Smith v. Bank of New York Mellon

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

January 9, 2020

KAREN D. SMITH, Plaintiff,
BANK OF NEW YORK MELLON et al., Defendants.


          John C. Coughenour UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on Plaintiff's motion for partial summary judgment (Dkt. No. 53) and motion to strike affirmative defenses (Dkt. No. 49). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS the motion for partial summary judgment (Dkt. No. 53) and GRANTS the motion to strike affirmative defenses (Dkt. No. 49) for the reasons explained herein.

         I. BACKGROUND

         On February 9, 2007, Plaintiff obtained a loan from Mortgage Solutions Management, Inc. and secured the loan with a deed of trust on her property. (Dkt. No. 45 at 5.) In July 2007, Plaintiff stopped making payments on the loan. (Id.) Shortly thereafter, Plaintiff filed for bankruptcy, and her mortgage loan was eventually discharged. (Id. at 5-6.) Defendant Bank of New York Mellon (“BONY”) retained an in rem interest in Plaintiff's property after the discharge and recorded a series of notices of trustee's sales from 2009 through 2016, although none of the sales occurred. (Id. at 6-7.) In November 2016, Plaintiff initiated mediation under Washington's Foreclosure Fairness Act. (Id. at 8.) During mediation, Plaintiff was informed that her loan modification application was denied. (Id.) Plaintiff alleges that Defendant BONY, through its loan servicer Defendant Shellpoint and its legal counsel Defendant Malcolm & Cisneros (“M&C”), stopped participating in mediation. (Id. at 8-9.) On January 10, 2018, a foreclosure mediation certificate was issued stating that “[Defendant Shellpoint] failed to timely participate in mediation.” (Dkt. 45-2 at 3.)

         On April 11, 2018, Defendant M&C filed a judicial foreclosure complaint on behalf of Defendant BONY in King County Superior Court against Plaintiff's property. (Dkt. No. 45 at 9.) After the case was removed to federal court, the Honorable Thomas S. Zilly dismissed the judicial foreclosure complaint with prejudice, finding that it was time-barred. (Id.); see Bank of New York Mellon as Tr. for Certificate Holders of CWABS, Inc. v. Smith, No. C18-0764-TSZ, Dkt. No. 16 (W.D. Wash. 2018). Defendants appealed, and the Ninth Circuit Court of Appeals affirmed. See Bank of New York Mellon as Tr. for benefit of certificate holders of CWABS, Inc., asset-backed certificates, Series 2007-SD1 v. Smith, 782 Fed.Appx. 638 (9th Cir. 2019).

         Plaintiff subsequently filed this lawsuit, bringing claims against Defendants for: (1) violations of the Washington Consumer Protection Act (“CPA”), Revised Code of Washington § 19.86.020; (2) violations of the Federal Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692; (3) negligent misrepresentation; and (4) a claim to quiet title. (Dkt. No. 45 at 11- 26.) Plaintiff now moves for summary judgment on her quiet title claim against Defendant BONY. (Dkt. No. 52.) Plaintiff also moves to strike M&C's affirmative defenses (Dkt. No. 49.)


         A. Legal Standards

         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In making such a determination, the court must view the facts and justifiable inferences to be drawn therefrom in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Once a motion for summary judgment is properly made and supported, the opposing party “must come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed.R.Civ.P. 56(e)). Material facts are those that may affect the outcome of the case, and a dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Anderson, 477 U.S. at 248-49. Conclusory, non-specific statements in affidavits are not sufficient, and “missing facts” will not be “presumed.” Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888-89 (1990). Ultimately, summary judgment is appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

         B. Quiet Title Action

         Under 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). When a promissory note is 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)). And when the statute of limitations to enforce a promissory note expires, the right to enforce a deed of trust securing the note also expires. Walcker v. Benson & McLaughlin, P.S., 904 P.2d 1176, 1178 (Wash.Ct.App. 1995). “When an action for foreclosure on a deed of trust is barred by the statute of limitations, RCW 7.28.300 authorizes an action to quiet title.” Westar Funding, Inc. v. Sorrels, 239 P.3d 1109, 1113 (Wash.Ct.App. 2010); Wash. Rev. Code § 7.28.300. The statute provides:

The record owner of real estate may maintain an action to quiet title against the lien of a mortgage or deed of trust on the real estate where an action to foreclose such mortgage or deed of trust would be barred by the statute of limitations, and, upon proof sufficient to satisfy the court, may have judgment quieting title against such a lien.

Wash. Rev. Code § 7.28.300.

         Plaintiff made her last payment in July 2007, and Defendant BONY initiated the judicial foreclosure proceeding in April 2018. (Dkt. 45 at 5, 9.) Plaintiff argues that, even after accounting for tolling during Defendants' nonjudicial foreclosure actions, the statute of limitations expired ...

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