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JACOB D. BRADBURN, an individual,

PlaintiË

SUPERIOR COURT OF WASHINGTON

COUNTY OF SNOHOMISH

THE CIViL MOTIONS ¡UPdgHearing Date: November 1,2013

Heæing Time: 9:30 a.m.With Oral Argument

LANEPOWELLPc1420 FIFTH AVENUE, SUTTE 4t00

SEATTLE, WASH¡NGTON 98 l0t-2338206 -223.7 oW F

^X: 206.223.7 t 07

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NO. r t-2-08345-2

DEFENDANTS' MOTION FORSUMMARY JUDGMENT

RECONTRUST COMPANY, N.4., a limited- tPy^rp_9.19_T?tional trust bank; FIQELITy )p,urpose national trust bank; FIDELITYNATIONAL TITLE, a corporation; )

)MORTGACE ELECTROÑIC

BANK HOME LOANS SERVTCING LP, a ¡foreignentity; ÞAliE oF AMEzuCA, N.Á., a )natioñal bank; BANK OF AMEzuCA'çqry_qBôIiON, a foreign co{porarion;COLINTRYWIDE FINAÑCIA¿

corporation; BAC HOME LOANSSERVICING, LP FKP COI.JNTRYWIDE

CORPORATION, Açg$-q\{.f{_oll q fgte_rgr¡ corporarion; iCOLINTRYWIDE HO-ME LOÄNS,INÓ., A 'fqryte::qryo3ation; FEDERALNATIONAL T

MORTGAGE ASSOCIATION, a federa[y tMORTGAGE ASSOCIATION, a federa[ychartered corporation, LINDA GREEN DOES )l-10, unknown

Co. dlbla COMMONWEALTH UNITED ))

REGISTRATION SYSTEMS,INC., a foreign tggr!91glr9!; BAC HOME LOANS iSERVICING,-LP FKP COI.JNTRYWIDE

'

MORTGAGE COMPANY, a foreign icorporation; STEWART TíTLE, aäomestic tcorporation, )

)

and QUICKDRAW )IES,INC d1bla )

l-lu, unKnown persons; ancl eUIUKDRREAL ESTATE SERVICES, NC üblAHOMESTAR LENDING, a domesticflrJtvl.Eö r ,r.K LtrNIJINU, a domestic )lolpogtiory _I.{ATIONAL CITY MORTGAGE i

corporation; STEWART TITLE, acorporation,

. _

Defendants. ]

DEFENDANTS' MOTION FOR SUMM.ARY JUDGMENT - I

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1987)'ûî'd876F'zd897 (9thCir. 1989)("Anassignmentof adeedof trust...isvalidbetween the parties whether or not the assignment is ever recorded. . . . Recording of the

assignrnents is for the benefit of the parties.") (intemal citations omitted). For this reason ¿¡s

well, the MERS assignment is inelevant to BANA's authority to foreclosure through the

trustee.

3.

Borrower asserts that "[a]ny assignment of trustee powers to ReconTrust did not

comply \¡vith RCW 61.24.010(2)" because the assignment was made by aparty other than the

beneficiary or lender, suclt that ReconTrust was not authorized to institute non-judicial

foreclosure or grant a trustee's deed to Fannie Mae. compl. 1[1Í4.1g-4.21. However, as

discussed above, the evidence shows MERS acred as the agent of and at the direction of the

beneficiary, BANA, when it appointed ReconTrust as successor trustee, See supra Section

V.D.2. Thus, ReconTrust was a valid successor trustee. ,S¿e RCW 61.24.010(2) (.The trustee

may resign at its own election or be replaced by the beneflreiary.,).

4.

Borrower next asserts that "defendants Trustees Fidelity, Stewart and/or ReconTrust

breached their duties of Good Faith to [Bonower] by permitting ReconTrust's non-judicial

foreclosure to occur on the [Borrower's] Property and not providing [Bonower] with

information on one or more practices described in Jf 2.3 of this complaint.,' Compl. n 4.26.

He further alleges that "ReconTrust willfully, knowingly, or intentionally initiated and

continued a non-judicial foreclosure for the servicer when ResonTrust knew or should have

known that BAC Home Loans was not the beneficiary and/or that proof of the beneficiary

and/or a declaration of the beneficiary had not been provided as is required by RCW

64.21.üAQ)." Id- n 4.27. These allegations are without merit and contradicted by the

evidence.

DEFENDANTS' MOTION FOR SUMMARY JUDGMENT - I5

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Bor¡ower's allegation that ReconTrust failed to provide Borrower information on the

"ptactices described in tf 2.3 of this complaint" is nonsensical. paragraph 2.3 of the

Complaint alleges that "[o]ne or more parties acquired certain rights, and/or legal or equitable

interests in fBonower's] prior mortgage on one or more secondary markets," Id. nZ3.HoweveÌ, there is nothing illegal or improper in securitizing a loan. Thus, it was not a

violation of any duty of good faith not to inform Borrower of the securitization of his loan.

Moreover, if any loan was securitized, Ít was Borower's prior loan, which is not at issue in

this case.

Borrower's allegation that ReconTrust "knew or should have known that that BAC

Home Loans was not the beneficiary" is contradicted by the evidence confirming that BANA

was the holder of the Note and the beneficiary. BANA Decl. !f 10, 1g, 26.

In addition, the evidence establishes that when ReconTrust issued the Notices of

Trustee's Sale, it had a Declaration of Beneficiary that complied with the DTA. RCW

61.24.ßAQ)(a) provides "[tJhat, for residential real property, before the notice of trustee's

sale is recorded, transmitted, or served, the trustee shall have proof that the beneficiary is the

owner of any promissory note or other obligation secured by the deed of trust." Here, the

Declaration of Beneficiary accurately identifies Fannie Mae as the owner of the Noie. Ex. C

to ReconTrust Ðecl.; see BANA Decl., nn 7,2s. while Borrower may contend that the

Declaration does not identi$ BANA, the beneflrciary, as the owner of the Note, it would be

inaccurate for the Declaration to so state because BANA was the holder of the Note. Any

claimed inconsistency is the result of ambiguity in the language of RCW 61.24.030(7)(a), i.e.,

that it fails to take into account the rather common scenario where the holder of the Note and

the owner of the Note are not one and the same. As noted above, the Western District has

recognized the reality that when Fannie Mae is the owner of the Note, the holder of the Note

can foreclose in its own name. See Zalac,2013 WL 1gg0728, at t3 (granting motion to

dismiss where "Defendant [] asserts that it is the true holder of the note, even if Fannie Mae is

DEFENDANTS' MOTION FOR SUMMARY JUDGMENT- I6

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the owner of the note.") (emph. in original); corales, gzz F. supp. at ll07-0g (granting

motion to dismiss in û'rnctionally identical circumstances where lender sold loan to Fannie

Mae but then proceeded to foreclose in its own name - "Thus, even if Fapnie Mae has an

interest in Plaintiffs' loan, [Defendant] has the authority to enforce it.,,); see also In re Veal,

450 B'R' 897, 912 (9th Cir' BAP 2011) ("[O]ne can be an owner of a note without being a

'person entitled to enforce.' The converse is also true: one can be a .person entitted to

enforce' without having any ownership interest in the negotiable instrurnent. This distinction

may not be an easy one to draw, but it is one the UCC clearly embraces, Wtrile in many cases

the owner of a note and the person entitled to enforce it are one and the same, this is not

always the case.").

Indeed, it is fairly typical for Fannie Mae to require, under its servicing guidelines,

that the servicer hold the Note and foreclose in its own name. ReconTrust would certainly

have been famitiar with that accepted practice. In addition, Borrower did not know of the

Declaration of Beneficiary until after the sale, so he can hardly claim that he relied on it or

was prejudiced by it. It is not as if a stranger to the Loan foreclosed on the property; the

holder of the Note and loan servicer did so, as expressly required by the servicing guidelines

of the owner of the Note. In the end, any claimed contradiction or claimed ambiguity in who

was the beneficiary is no more than a red hering. BANA was the holder of the Note and,

thus, was entitled to foreclose.

Borrower alleges that Defendants failed to follow non-judicial foreclosure procedures.

Compl' ïn4.28-4'35. However, the¡e is simply no evidence to support Borrower's conclusory

allegations. To the contrary, the evidence shows that Defendants followed proper foreclosure

procedures.

Non-judicial foreclosures in Washington are governed by DTA chapter FICW 61.24 et

seq., which sets out the procedural requirements necessary before a notice of trustee sale can

DEFENDANTS' MOTION FOR SUMMARY JUDGMENT_ 17

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THE CiVIL MOTIONS JUHearing Date: November 1, 2013

Hearing Time: 9:30 a.m.

With Oral Argument

SUPERIOR COURT OF WASHINGTON

COUNTY OF SNOHOMISH

9 ll JACOB D. BRADBURN, an individual, Case No.: 11-2-A$45-2

Plaintiff

v.

RECONTRUST COMPANY, N,4., Alimited-purpose national trust bank;FIDELITY NATIONAL TITLE, Acorporation; MORTGAGEELECTRONIC REGISTRATIONSYSTEMS, INC., a foreign coqporation;BAC HOME LOANS SERVICING, LPFKP COUNTRYWIDE BANK HOMELOANS SERVICING LP, a foreignentity; BANK OF AMERICA, N.4., anational bank; BANK OF AMERICACORPORATION, a foreign corporation;COUNTRYWIDE FINANCIALCORPORATION, a foreign corporation,FEDERAL NATIONAL MORTGAGEASSOCIATION, a federally charteredcoqporation; LINDA GREEN DOES 1-10, unknown persons; and QUICI(DRAWREAL ESTATE SERVICES,INC b/d/AHOMESTAR LENDING, a domesticcorporation; NATIONAL CITYMORTGAGE CO. d/b/aCOMMONWEALTH UNITEDMORTGACE COMPANY, a foreigncorporation; STEWART TITLE, adomestic corporation,

Defendants.

DEFENDANTS' OPPOSITION TO BORROWER'S SECONDMOTION FOR PARTIAL SUMMARY JUDGMENT. I

DEFENDANTS' OPPOSITION TOBORROIVER'S SECOND MOTIONFOR PARTIAL SUMMARYJUDGMENT

LANE POWELLPCI42O FIFIH AVENUE, St'TTE 42OO

P.O. BOX 91302SEATTLE, WA 981I l-9402

206.2n 1 Aæ F AX: 206.223.7 I 0-llF\i, zitir:'UJ

iiI t6589.041 r/5856841.r ,...^

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where lender sold loan to Fannie Mae but then proceeded to foreclose in its own name -"Thus, even if Fannie Mae has an interest in Plaintiffs' loan, fDefendant] has the authority to

enforce it.').

b. ryfERSr as the Agent of the Beneficiary, was Authorized to AppointReconTrust

Borrower asserts that "ReconTrust was never lawfully appointed trustee as MERS was

not a lawful beneficia¡y or acting on behalf of a lawful beneficiary and therefore had no

authority to appoint a successor trustee." Borrowers' Motion, at L However, this assertion

ignores the fact that MERS was acting as an agent of and at the direction of BANA, the

beneficiary.

Ïn Bain, the Washington Supreme Court held that MERS cannot be a valid beneflrciary

if it does not hold the Note. Baín, 175'Wn.2d at 110. However, the Court concluded that it

could not decide the legal effect of MERS's acting as an unlawful beneficiary. Id.at 110-14.

In addition, the Court noted that "nothing in this opinion should be construed to suggest an

agent cannot represent the holder of the note." Id. at 106. The Court further noted that

"Washington law, and the deed of trust act itsel{ approves of the use of agents." Id.s The

Court declined to find that MERS vias acting as the agent of the beneficiary only because

there was no evidence in either of the cases it was reviewing showing that MERS was acting

on behalf of identifiabie beneficiarie s. Id. at 107.

In the present case, by eontrast, the evidence est¿blishes both BANA as the

beneficiary (as the holder of the Note) and MERS acting as BANA's agent when it appointed

ReconTrust as the successor. BANA Decl.,'!f 21, Ex. F to BANA Decl. BANA, as the holder

of the Note, directed MERS to appoint ReconTrust. Id. tt did so in compliance with Fannie

Mâe's servicing guidelines which "grant[] servicers, acting in their own names, the authority

to represent Fannie Mae's inte¡ests in foreclosure proceedings as holder of the mortgage

note." Ex. E to BANA Decl., at l.

E See RCW 6l .24.031 (stating that benefrciary can act through an aurhorized agenr); RC1V 6 L24.050 (same).

DEFENDANTS' OPPOSITION TO BORROWER'S SECONDMOTION FOR PARTIAL SUMMARY JUDGMENT. S

II6589.04I1t585684t 1

LANEPOIilELLPcI42O FITTH AVENUE, SUIÎE 42OO

P.O. BOX91302SEATTLE, WA 98lu-9402

206.223.7000 F AX: 246.223.7 I 07

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ReconTrust as successor tn¡stee, were done at BANA's direction and as its agent, in

accordance with the servicing guidelines of Fannie Mae, the owler of the Note"

a. B.ANA lVas the Holder of the Note and Beneficiary

Since 1998, the Deed of Trust Acthas defined a"beneficiary" as "the holder of the

instrument or document evidencing the obligations secured by the deed of trust, excluding

persons holding the same as security for a different obligation." Boin v. Metro. Mortg Grp.,

Inc., r75 wn.2d 83, 98-99, 2s5 p.3d 34 (2012) (quoting RC\M 6l.z4.0ase)) (emphasis

added). The Washington U.C.C. defines the "Holder" of a negotiable instrument in relevant

part as "[t]he person in possession of a negotiable instrument that is payable . . . to bearer,

RCW 624.1 -20I(21); Bain, !75 Wn.2d at 104. A negotiable instrument is payable to bea¡er

if it is indorsed in blank. ,See RCW 62.A3-2A5(b) ("When indorsed in blank, an instrument

becomes payable to bea¡er and rnay be negotiated by transfer of possession alone until

specially indorsed.").

Applying the plain language of the statutes and case cited above, the evidence

establishes that BANA was the holder of the Note. Following the Loan's origination, the

Note was endorsed 1o Counûywide Bank, N.A, which endorsed the Note to Countrywide

Home Loans, Inc., which endorsed the Note in blank. BANA Decl., ïllg, 9, Exs. A, B to

BANA Decl. Since January 3,2006, when Fannie Mae beeame the owner of the Note, the

original, endorsed-in-blank Note has been maintained by BANA and its predecessors in

interest on behalf of Fannie Mae, pursuant to Fan¡rie Mae's servicing guidelines. .Id.,1 10, 18,

26,F;x. E to BANA Decl.

Because it was the holder of the Note, BANA had the right to foreclose and to take

any necessary steps to foreclose. See Zøløc v. CTX Mortg. Corp., Case No. C12-01474 MJP,

2013 lVL 1990728, at t3 {W.D. Wn. May 13, 2013) (granting motion to dismiss where

"Defendant [] asserts that it is the true holder of the note, even if Fannie Mae is the owner of

the note.") (emph. in original); corales v. Flagstar Bank, FSB, g?z F. supp. 2d 1102, 1 107-

08 (W.D. Wn. 2011) (granting motion to dismiss in functionally identical circumstances

DEFENDANTS' OPPOSITION TO BORROWER'S SECONDMOTION FOR PARTIAL SUMMARY JUDGMENT. T

r lé589.04t t/585684t. t

LANE PO}VELLfC¡420 FIFTH AVENUE SUTTE 42M

P,O. BOX91302sEÁ'I'rLE, WA 98ll l-9402

206.223.7w0 F ¡.X: 2A6223.1 107