Case Wa Appct-i Jackson v Qls, Etal_2014!10!28__appellants Supplemental Brief--re Dta Must Be Interpreted to Comply w Wa Constitution (14 Pgs)

8/10/2019 Case Wa Appct-i Jackson v Qls, Etal_2014!10!28__appellants Supplemental Brief--re Dta Must Be Interpreted to Co

1/14

No.72016-3-1

COURTOF APPEALS DIVISION ONEOFTHE STATE OF WASHINGTON

SandraShelleyJackson,

Appellant,

vs.

QualityLoanServiceCorporation ofWashington,et al.,

Respondents.

APPELLANTS SUPPLEMENTAL BRIEF

ScottE.Stafne,WSBA No.6964

JoshuaB. Trumbull, WSBA No.40992

Brian J.Fisher,WSBA No.46495

EmilyA. Harris, WSBA No.46571

MatthewK Link,WSBA No.46659

MitchelF. Wilson,LicensedLegal Intern No.9217581

STAFNETRUMBULL, PLLC239North OlympicAvenue

Arlington,WA98223

Phone:(360)403-8700

Fax:(360)386-4005


2/14

Tableof Contents

1

CashmereSupports ConstruingAL L oftheBeneficiaryDefinition

Criteriain RCW 61.24.005(2) 1

2. Rucker, Walker, andBavand Advance that Trustee Reliance on a

BeneficiaryDeclaration is Irrelevant where there is no Proper

Beneficiary 2

3. Trujillo s

Applicationo fRCW61.24.030(7)May Result in

Interpretations InconsistentwithSeparation of Powers Principles

Prohibitingthe Legislature to Mandate Legal Conclusions 4

4. Frizzell andFrias Suggestthat Superior Courts Exercise Appellate

JurisdictionoverNonjudicialForeclosure Proceedings 5

5. Frias grants Jackson a remedy under the CPA for Defendants' pre-

foreclosuresaleDTAviolations 7

i


3/14

TableofAuthorities

Washington Constitution

Art I , 7 4

Wash, Const.Art. I , 12 7

Wash. Const.Art . 4 6 6

WashingtonCases

Albice v.Premier Mortg. Servs. of Wash., Inc., 174 Wn.2d 560, 567-68,

276P.3d 1277 (2012) 3

Bain v. Metro. Mortg. Grp., Inc., 175 Wn.2d 83, 110,285 P.3d 34 (2012).

: 2,4

Bavandv. OneWestBank, FSB, 176 Wn. App. 475, 484, 488, 309 P.3d

636(Div. I , 2013) 1,2

Blanchard v. Golden Age Brewing Co., 188Wash.396, 417-1863 P.2d

397(1936) 5,6,7

Cashmere Valley Bank v. Dept of Revenue, Wn.2d , P.3d ,

SlipOp. 89367-5,2014 Wash. LEXIS 769, *16 (2014) 1,2

Cox v.Helenius, 103Wn.2d 383, 387, 693 P.2d 683 (1985) 4

Frias v. Asset Foreclosure Servs., Inc., Wn.2d P.3d , Slip

Op.89343-8,2014 Wash.LEXIS 763 (2014) passim

Frizzell v Murry, 179 Wn.2d at303-304, 313-321 1, 5, 6

In re Marriage ofBuecking, 179 Wn.2d 438, 449, 316P.3d 999 (2013)...7

Klem, 176 Wn.2d at 790 4

Lunsfordv. Saberhagen Holdings, Inc., 166 Wn.2d 264, 279-80,208 P.3d

1092(2009) 7

l


4/14

Ruckerv. NovaStar Mortg., Inc., 177Wn.App.1,14, 311P.3d31(Div. I,

2013) 1,2

Schroeder v. Excelsior Mgmt. Grp., LLC, 111Wn.2d 94,108,297 P.3d

677(2013) 3

Schroeder v. Weighall, 179 Wn.2d 566,316P.3d 482 (2014) 7

Sofie v.Fibreboard Corp., 112Wn.2d636, 654, 771P.2d711(1989) ....5

Trujillo v. Nw. Tr.Servs., Inc.,181Wn. App. 484, 326P.3d 768(Div. I ,

2014) 1,3,4,5

Walker v. Quality Loan Serv. Corp. ofWash., 176Wn.App. 294, 309,308

P.3d716(Div. I ,2013) 1,2

ZDI Gaming, Inc.v.Wash. State Gambling Comm n, 173Wn.2d 608,616-

617,268 P.3d929, 933 (2012) 6

WashingtonStatutes

RCW

61.24.005(2)

passim

RCW 61.24.010(2) 1,2,3,4

RCW

61.24.010(4)

3

RCW61.24.030 3

RCW

61.24.030(7)

1,3,4,5

RCW61.24.030(7)(b) 3

RC W

61.24.040(6)

3

RCW61.24.127 6

RCW 61.24.130(1) 6

iii


5/14

FederalCases

Frazer v. Deutsche Bank Nat I Tr. Co., 2014 U.S. App. LEXIS20112 (9thCir.2014) 5

iv


6/14

Thissupplemental briefdiscussesthe impacto frecentprecedent

onissuesbefore this Court. Section (1)addressesthedefinitiono f

"beneficiary" under RCW61.24.005(2)inlightof Cashmere. Section (2)

discussesthe impactofRucker, Walker, and,Bavand in construing RCW

61.24.010(2)and RCW 61.24.030(7). Section (3)discusseshow this

Court'sinterpretation ofRCW 61.24.030(7) inTrujillo should be

interpreted to be constitutional. Section (4)suggestsFrizzell and Frias

causedifficultiesin construing theDTAbecausetheypresumethe DTA

confersappellate subject matterjurisdiction upon superior courts. Finally,

Section(5) examines the impactofFrias onJackson'srightto pre-

foreclosuresalereliefunder the CPA.

1. Cashmere Supports Construing ALLof the Beneficiary

DefinitionCriteria

inR CW

61.24.005(2)

TheDTA defines"Beneficiary"as, "[1]the holder of the

instrumentor document evidencing the obligations [2]securedby thedeed

oftrust, [3] excludingpersonsholdingthesameas security for adifferent

obligation."RCW 61.24.005(2) (numbered brackets added). Washington's

SupremeCourt has not construed the meaning of the second and third

1


7/14

criteria;i nBain, the Courtonly construedthemeaningo f the firstcriteria:

apartymusthold the promissorynote.

1

InCashmere Valley Bank, ourSupremeCourtheldthe statutory

language"primarily securedby aresidentialmortgage"was legally

significantfurthermore, the Courtdeterminedwhetheran investment

was "secured"isbasedon the natureof thesecurity trustagreement and

theremediesprovidedtherein.2Thus,the words"secured"and "security,"

aswell as "differentobligation" in the second and third criteriaof RCW

61.24.005(2)

are legally significant,notmerelysuperfluous.

2. Rucker, Walker, andBavand AdvancethatTrustee Reliance on

aBeneficiaryDeclarationis Irrelevantwherethereis no Proper

Beneficiary

Onlyaftera"properbeneficiary"3appointsan entityas trustee

pursuantto RCW 61.24.010(2),can thatentity act as trusteeand perform

certainnonjudicial foreclosureproceedings.4Additionally, aproperly

appointedtrusteemuststrictly complywith theprocedures set forthunder

See Bain v. Metro. Mortg. Grp., Inc., 175 Wn.2d 83, 110,

285 P.3d 34 (2012).2

Cashmere Valley Bank v.Dept of Revenue, Wn.2d , P.3d , Slip

Op.89367-5,2014 Wash. LEXIS 769, *16 (2014).3

AproperbeneficiarymeetsallthreecriteriaofRCW 61.24.005(2).See supra Section14

See e.g., Bavand v. OneWest Bank, FSB, 176 Wn. App. 475, 484,488,309 P.3d 636

(Div. I , 2013);Rucker v. NovaStar Mortg., Inc., Ill Wn . App. 1, 14,311P.3d 31 (Div. I ,

2013); Walker v. Quality Loan Serv. Corp. of Wash., 176 Wn. App. 294, 309, 308 P.3d

716(Div. I , 2013)overruled on other grounds by Frias v. Asset Foreclosure Servs., Inc.,

Wn.2d , P.3d , Slip Op. 89343-8,2014 Wash. LEXIS 763 (2014).

2


8/14

theDTA 5 includingrequisite provisions in RCW 61.24.030.6

Aproperly appointedtrusteemust strictlycomplywithRCW

61.24.030(7)as aconditionprecedent to recording],transmitting],or

serv[ing]"a noticeoftrustee'ssale.7Only avalidtrusteepursuant to RCW

61.24.010(2),whichhas never violated its duty of good faithunder RCW

61.24.010(4), may rely on a declaration,"madeunder the penalty of

perjurystating that the beneficiary is the actual holder of the promissory

noteor otherobligationsecuredby thedeedo ftrust...

[as]sufficient

proof to initiatenonjudicialproceedings.9 RegardlessofstrictDTA

compliance,a purportedtrustee'snonjudicialforeclosuresalesare void i f

itwas not appointed by a proper beneficiary.

Itis important to distinguish the requirements ofRCW

61.24.005(2)(which establishesthe statutory criteriaforbeing a proper

beneficiary)fromRCW61.24.010(2)(whichrequires proofo faproper

beneficiary before anyvalidappointment of asuccessortrusteecan occur)

fromRCW 61.24.030(7) (whichsetsforththeproofatrusteewith

authorityto act under theDT Amusthavein order to record a notice of

See RCW61.24.040(6);

see also Albice v.Premier Mortg. Servs. of Wash., Inc.,174

Wn.2d560, 567-68, 276 P.3d 1277 (2012).6 SeeSchroeder v. Excelsior

Mgmt.

Grp., LLC, 177 Wn.2d 94, 108, 297 P.3d 677 (2013).7 Trujillo v. Nw. Tr.Servs., Inc., 181 Wn. App. 484, 326 P.3d 768 (Div. I , 2014).8

SeeRCW61.24.030(7)(b).

9

Trujillo, 181 Wn. App 493-497.

3


9/14

trusteesale). What atrusteemay rely on under RCW 61.24.030(7) is not

equivalentto what satisfies the beneficiary criteria andestablishes

authorityto act under theDTAunder RCW61.24.005(2)and RCW

61.24.010(2)

respectively. Absentthesedistinctions, entities seeking to

nonjudiciallyforeclose mayissuerobo-signed self-serving declarations

falsely announcingthemselvesbeneficiary, withoutaffordinginterested

partiesan opportunity to challenge the authority oftheseentities to

preventwrongful foreclosures.10

ThatD TApolicyis consistent withconstitutional dueprocess

requirements. [N]eitherdueprocessnor equitywi l l countenancea system

thatpermits the theft ofa person'sproperty . . . under the guise ofa

statutorynonjudicialforeclosure."Accordingly,a charlatan beneficiary

and/orits trustee, acting withoutlawfulauthority, cannot foreclose on

people'shomes.11

3. Trujillo s Application ofRCW61.24.030(7)May Result in

InterpretationsInconsistent with Separation of Powers Principles

Prohibiting the Legislature to MandateLegalConclusions

Jacksonargued this Court should not interpret the second sentence

ofRCW 61.24.030(7) to allow a self-serving declaration to control the

judicial inquiryof evidence regarding the existence of a proper

1 0 SeeBain, 175Wn.2d at 94 (quotingCox v.Helenius, 103Wn.2d 383, 387, 693 P.2d

683(1985).

Klem, 176Wn .2d at 790;seealso Art I , 7 (No person shall be disturbed in his private

affairs, or his home invaded,without authority of law.") (emphasis added).

4


10/14

beneficiary.OB, pp. 38-39. Trujillo comesdangerously close to such a

result.

12

Trujillo

s

interpretation ofRCW 61.24.030(7) is questionable

whereother courts could apply it to allow a declaration, submitted to

satisfy RCW61.24.030(7),to dictate the result ofthejudicial inquiryas to

the existence ofaproper beneficiary under RCW61.24.005(2).13

Interpretationso fTrujillo that allow the legislature to substitute the

outcomeofjudicialinquiries regarding the beneficiarycriteria,based

solely on a self-serving declaration, violate the Washington Constitution.

"Anylegislative attempt tomandatelegal conclusions . . .

violate[s]the separation ofpowers."14The legislature cannot make the

declaration conclusive and irrebuttableproofthat an entity satisfies the

threecriteria under RCW 61.24.005(2).

4. Frizzell andFrias Suggestthat Superior Courts Exercise

AppellateJurisdiction over Nonjudicial Foreclosure Proceedings

Jacksonargues superior courts' subject matterjurisdictionover

foreclosuresoflandisconstitutionallytied to their enumerated original

1 2

See Trujillo, 181 Wn . App . at501, 509-10.1 3 See, e.g.,Frazer v. Deutsche BankNat'l Tr.Co.,2014 U.S. App.LEXIS20112(9th

Cir.2014) (citingRCW 61.24.030(7) and Trujillo for proposition that declarationsubmitted under RCW61.24.030(7)was sufficient proof that Deutsche Bank National

Trust was a proper beneficiary).1 4

Sofie v.Fibreboard Corp., 112Wn. 2d 636, 654, 771 P.2d 711(1989).See also

Blanchard v. Golden AgeBrewing Co.,188 Wash. 396,417-1863P.2d397(1936) ("The

legislaturecannot indirectlycontrol the action o f the court by directing whatstepsmust

betaken in theprogresso fajudicial inquiry, for that isajudicialfunction.")

5


11/14

jurisdiction involvingthetitleandpossessionofrealproperty.15

InFrizzell, ourSupremeCourt held superior courts must strictly

followRCW 61.24.130(1),whichconditions granting aninjunctionto stop

animpendingsaleofthe home upon the applicant's payment of a bond, in

anamount determined by the foreclosingparty.16Similarly,in Frias, our

SupremeCourtappearedtoacceptthe legislative instructions in RCW

61.24.127,whichfavors and limitswaiveranequitable doctrineof

specificcausesofactionandremedies.17

A court's subject matterjurisdiction, ("equitable," "enumerated or

generaloriginal,"and "appellate," etc.) determines the extent of its

18

review. Read together,Frias andFrizzell suggest that superior courts

effectivelyexerciseappellate jurisdictionunder theDTAtheCourt

appearstoacceptlegislative restrictions on itsoriginal jurisdictionin

equity and waiver without determining whether the restrictions are

5 Wash. Const. Art.4 6; OB, pp. 9-26; Consolidated Reply, pp. 6-15.1 6 Frizzell v

Muny,

179Wn.2d at 303-304, 313-321;but seeBlanchard, 188

Wash,at415-416("The granting orwithholdingof an interlocutoryinjunctionis

addressedto the sound discretion of the court, to be exercised according to the

circumstancesofthe particularcase. . . it is the duty of the court to exercise itsequitypower and grant thenecessaryrelief. )1 7

Frias, Wn.2d , Slip Op. 89343-8, Wash.LEXIS763 * l -2 , 12-13, 25-

33.1 8

SeeZDI Gaming, Inc. v. Wash. State Gambling Comm n, 173 Wn.2d 608, 616-617,

268P.3d 929, 933 (2012) (reciting thatSupremeand Superior courtshaveirreducible

jur isd iction) .

6


12/14

appropriate.19Accordingly,it is absolutely essential this Court announce

thenature of the superior courts'jurisdictionto resolvecasesarising

pursuantto theDTA.

5. Frias grants Jackson a remedy under theCPA for Defendants'

pre foreclosuresaleDTA violations

Wherethe Supreme Court has ruledauthoritativelyon anissue,its

rulingapplies retroactivelyunlessthe Courtsaysotherwise.20Frias did

notexplicitlystateitsrulingon CPAcausesofactionrelated to the DTA

wasprospective.

21Thus, underFrias, the CPA provides Jackson abasis

forrelief fromDefendants' DT Aviolationswhichwere previously alleged

asdeclaratory judgmentcausesofaction.22

1 9

See e.g. In reMarriage ofBuecking, 179 Wn.2d438,449, 316P.3d 999

(2013)("legislation . .. divesting a constitutional court ofitspowers isvoid . . .

thelegislature may prescribereasonableregulations that do not divest the court

of itsjurisdiction." (CitingBlanchard, 188Wash,at414,418));Schroeder v.

Weighall, 179Wn.2d 566,316P.3d 482(2014)(suspending statuteof

limitationsfor minorsbringingmedical malpractice claimsabsentlegislative

justi ficationviolated Wash, Const. Art. I , 12, and court'soriginal general

jur isd ict ion);Blanchard, 188Wash,at418(The legislature cannot restrict the

court'sequityjurisdiction withregard to the superior court's discretion toissuean injunctionbecause the constitution has specificallygranted the superior court

jurisdic tionin equity).20

Lunsford v

Saberhagen Holdings, Inc., 166Wn.2d 264, 279-80, 208 P.3d 1092

(2009).2 1

Seegenerally Frias, SlipOp. 89343-8, 2014 Wash.LEXIS763 (2014).2 2

Id.

7


13/14

DATEDthis 28th day of October, 2014 atArlington,Washington.

Respectfully Submitted,

ScottE.Stafne,WSBA# 6964

JoshuaB.Trumbull,WSBA# 40992

BrianJ. Fisher, WSBA#46495

EmilyA.Harris, WSB A# 46571

Matthew K.Link,WSBA# 46659

MitchelF.Wilson,Licensed Legal Intern#9217581

StafneTrumbull,PLLC

8


14/14

CERT IF ICATE OF SERVICE

I ,Ashley Burns,certifyunder penalty ofperjuryunder the laws of

theStateofWashingtonthat theforegoingis true and correct:

1. At all times hereinafter mentioned I am a citizen of the United

Stateso fAmerica,a resident of theStateo fWashington,over the age of

eighteen years, not a party to the above-entitled action, and competent to

bea witness herein.

2. That on the 28th day of October,2014,1

causedto be served a true

and correct copy of the Appellants Supplemental Brief in the above title

matterby causing it to be delivered to:

DavisWrightTremaine LLPFredBurnside & Zana Bugaighis12013r aAve Ste 2200Seattle,

W A

98101-3045

[email protected]

zanabugaighis@dwt. com

Tomasi

SalyerBaroway

EleanorA.Dubay &KathrynSalyer121SWMorrisonSt Ste 1850Portland,OR 97204edubay@tsbnwlaw.

comksalyer@tsbnwlaw. com

Keesal,Young,& LoganRobert J. Bocko & Daniel Park1301

5

m

A v e

Ste3300Seattle,

W A 98101

[email protected]@kyl.com

FacsimileExpressMail

S U.S. FirstClassMailHandDeliveryLegal Messenger Service

S Electronic Service


S

U.S. FirstClassMailHandDeliveryLegal Messenger Service

S

Electronic Service


S U.S. FirstClassMailHand Delivery

Legal Messenger ServiceS

Electronic ServiceDATED28th day of October, 2014 atArlington,Washington.

AshleyBurns

I

Documents

Case Wa Appct-i Jackson v Qls, Etal_2014!10!28__appellants Supplemental Brief--re Dta Must Be Interpreted to Comply w Wa Constitution (14 Pgs)