... .
4On October 12, 2012, ReconTrust, Countrywide, LS Title, MERS, and BAC filed a
motion for relief pursuant to RAP 18.9, asserting that Leipheimer had failed to comply with this
court's order to pay the arrearages on the subject property's mortgage into the superior court
registry. As relief, they ask this court either to (1) dismiss Leipheimer's appeal in its entirety, (2)
condition his further participation upon compliance with our previous order, or (3) provide
appropriate terms or sanctions for Leipheimer's failure to comply with the order. However, our
order did not condition Leipheimer's right to appeal upon the payment of the arrearages into the
superior court registry. Instead, it was a stay of our consideration of Leipheimer's appeal that
was conditioned upon the making of such payments. Accordingly, the proper remedy is to lift the
stay. Because the appeal has now been heard, no further relief is warranted.
No. 67005-1/5
hypothetical facts outside the record in determining if dismissal is warranted.
Lehman, 153 Wn.2d at 422. Such motions should generally be granted "only in
the unusual case in which the plaintiffs allegations show on the face of the
complaint an insuperable bar to relief." San Juan County v. No New Gas Tax,
160 Wn.2d 141, 164, 157 P.3d 831 (2007).
This case is largely resolved by applying the rules set forth in Walker.
Given that this case involves different parties, several of whom play different
roles than those discussed in Walker, we will note these differences and their
significance when necessary.
Ill
Leipheimer first asserts that the trial court erred by dismissing his claims
against MERS and ReconTrust for wrongful foreclosure under the Washington
deeds of trust act, chapter 61.24 RCW (DTA).5 We agree.
As did the appellant in Walker, Leipheimer has characterized his claims
under the DTA, both in the trial court and on appeal, as claims for "wrongful
foreclosure." In response, MERS and ReconTrust have argued that, because no
foreclosure sale took place, the absence of such a sale should preclude these
claims. The basis of Leipheimer's claims, however, is his allegation that MERS
and ReconTrust failed to materially comply with the provisions of the DTA.
Leipheimer contends that because MERS did not hold the promissory note, the
company was not a lawful beneficiary under the DTA and that, accordingly,
5We note that, on appeal, Leipheimer attempts to assert a DTA claim against his loan
servicer, BAC. However, because his complaint included no such allegation, this claim is not
properly before us and we do not review it.
No. 67005-1/6
MERS had no authority to appoint ReconTrust as a successor trustee.
Accordingly, ReconTrust's issuance of the notice of trustee's sale was
necessarily in violation of the DTA. Thus, as we also determined in Walker,
Leipheimer's claims of "wrongful foreclosure" are more accurately characterized
as claims of damages arising from violations of the DTA. No. 65975-8-I, slip op.
at 6.
These claims were improperly dismissed by the trial court. As our
Supreme Court determined in Bain v. Metropolitan Mortgage Group. Inc., MERS
is "an ineligible beneficiary within the terms of the [DTA], if it never held the
promissory note or other debt instrument secured by the deed of trust." 175
Wn.2d 83, 110, 285 P.3d 34 (2012) (internal quotation marks omitted). The court
explained that "[a] plain reading of the statute leads us to conclude that only the
actual holder of the promissory note or other instrument evidencing the obligation
may be a beneficiary with the power to appoint a trustee to proceed with a
nonjudicial foreclosure on real property." Bain, 175 Wn.2d at 89. In Walker, we
reasoned that, because only a properly appointed successor trustee has
authority to issue a notice of trustee's sale, "when an unlawful beneficiary
appoints a successor trustee, the putative trustee lacks the legal authority to
record and serve a notice of trustee's sale." No. 65975-8-I, slip op. at 7. Such
actions, we held, constitute material violations of the DTA. Walker. No. 65975-8-
I, slip op. at 10. We further explained that where a trustee has failed to materially
comply with the provisions of the DTA, such conduct gives rise to a presale
cause of action for damages. Walker, No. 65975-8-I, slip op. at 17.
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No. 67005-1/7
Here, Leipheimer contends that ReconTrust engaged in conduct identical
to that which we found wrongful in Walker. MERS never held the promissory
note, Leipheimer asserts, and accordingly, it was an ineligible beneficiary.
Because MERS had no "power to appoint a trustee to proceed with a nonjudicial
foreclosure," it could not lawfully appoint ReconTrust to foreclose on
Leipheimer's property. Bain, 175 Wn.2d at 89. And, because only a properly
appointed successor trustee is vested with the power to issue a notice of
trustee's sale, the taking of such an action by ReconTrust with respect to
Leipheimer's property was also contrary to the DTA.6 Furthermore, as we noted
in Walker, it was not necessary for the foreclosure sale to be completed in order
for Leipheimer to maintain his claim for damages underthe DTA.
Assuming the facts alleged by Leipheimer in his complaint to be true, as
we must when reviewing an order of dismissal pursuant to CR 12(b)(6),
ReconTrust's issuance of the notice of trustee's sale constituted a violation of the
DTA. Because Leipheimer would be entitled to relief if such facts were proved at
trial, the trial court erred by dismissing this claim.7
6Leipheimer asserts two additional reasons that ReconTrust was not a valid trustee
under Washington law. He notes, first, that ReconTrust did not maintain a physical office in
Washington as required by RCW 61.24.030(6) and, second, that the company was a wholly
owned subsidiary of Bank of America, a party whom, Leipheimer speculates, may have held the
promissory note atthe time the foreclosure proceedings were initiated. Because, Leipheimer
contends, the same party cannot serve as both trustee and beneficiary, such an arrangement
also violates the DTA. These assertions by Leipheimer, however, are raised for the first time on
appeal and we do not consider them.
7Leipheimer asserts his DTA claims not only against the trustee but also against MERS,
the named beneficiary under the deed of trust. In Walker, we noted that the language of the DTA
refers only to the "'[f]ailure of the trustee to materially comply with the provisions of this chapter.'"
Walker. No. 65975-8-I, slip op. at 16-17 (emphasis in original) (quoting RCW 61.24.127(1)(c)).
However, we explained, our Supreme Court has recognized that "'[w]here the beneficiary so
controls the trustee so as to make the trustee a mere agent ofthe beneficiary, then as principle
No. 67005-1/8
IV
Leipheimer next asserts that the trial court erred by dismissing his claims
against ReconTrust, MERS, and BAC under the FDCPA. Leipheimer contends,
first, that ReconTrust and BAC violated section 1692e of the FDCPA based upon
those parties' false and misleading representations made in the course of debt
collection activities.8 Second, Leipheimer asserts violations of section 1692f(6)
of the FDCPA by ReconTrust or "any other party" based upon a "threat to take
non-judicial action to dispossess the Plaintiffs of their real property, without a
present right to possession."
Only Leipheimer's claims under section 1692f(6), however, afford him the
possibility of relief. In Walker, we adopted the predominant view emerging
among district courts within the Ninth Circuit and held that "'insofar as defendant
confines itself to actions necessary to effectuate a nonjudicial foreclosure, only
§ 1692f(6) of the FDCPA applies.'" No. 65975-8-I, slip op. at 20-21 (quoting
McDonald v. OneWest Bank, FSB, No. C10-1952, 2012 WL 555147, at *4 n.6
(W.D. Wash. Feb. 21, 2012)). "Acts required to institute foreclosure proceedings,
such as the recording ofa notice ofdefault, alone, are not debt collection
[sic] the beneficiary may be liable for the acts of its agent.'" Walker. No. 65975-8-I, slip op. at 16-
17 (alteration in original) (quoting Klem v. Wash. Mut. Bank. 176 Wn.2d 771, 791 n.12, 295 P.3d
1179 (2013). Here, as in Walker, we are able to plausibly hypothesize that MERS controlled
ReconTrust's actions in violating the DTA. Accordingly, Leipheimer's claim against MERS was
improperly dismissed pursuant to CR 12(b)(6).
8Leipheimer's complaint also alleged violations of the FDCPA by Countrywide.
However, on appeal, Leipheimer assigns no error to the trial court's dismissal of this claim.
Accordingly, only Leipheimer's section 1692e claims against ReconTrust and BAC are now at
issue. In addition, Leipheimer attempts to allege a violation of section 1692e by MERS.
However, Leipheimer's complaint did not include such an allegation and, accordingly, this claim is
not properly before us.
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No. 67005-1/9
activities for purposes of the FDCPA unless alleged in relation to a claim for
violation of 15 U.S.C. § 1692f(6)." Jara v. Aurora Loan Servs., LLC, No. C 11-
00419 LB, 2011 WL 6217308, at *5 (N.D. Cal. Dec. 14, 2011).
Here, the trial court did not err by dismissing Leipheimer's claims under
section 1692e of the FDCPA. There is no indication that either ReconTrust or
BAC engaged in any activities beyond those necessary to institute foreclosure
proceedings. Accordingly, Leipheimer's section 1692e claims against these
entities were correctly dismissed.
Leipheimer's claims under section 1692f(6), on the other hand, were
improperly dismissed by the trial court. Under this section, the term "'debt
collector'. .. includes any person who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose of which is the
enforcement ofsecurity interests." 15 U.S.C. § 1692a(6). Section 1692f(6)
prohibits such a person from "[t]aking orthreatening to take any nonjudicial
action to effect dispossession or disablement of property if. . . there is no present
right to possession of the property claimed as collateral through an enforceable
security interest." 15 U.S.C. § 1692f(6)(A).
In this case, Leipheimer's claims relate specifically to the enforcement ofa
security interest by MERS, ReconTrust, and BAC, and, as such, these parties
may be "debt collectors" within the meaning ofsection 1692f(6). Moreover,
under Leipheimer's theory ofthe case, none of these parties had a present right
to possession of the property through nonjudicial foreclosure because they were
not the holders ofthe underlying debt instrument. Accordingly, if Leipheimer is
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No. 67005-1/10
able to prove this underlying DTA violation, he may also be able to show that
MERS, ReconTrust, and BAC violated section 1692f(6) by threatening nonjudicial
foreclosure.
Presuming the facts stated in Leipheimer's complaint to be true,
Leipheimer's claims under section 1692f(6) of the FDCPA are claims upon which
relief could be granted. Accordingly, the trial court erred by dismissing these
claims pursuant to CR 12(b)(6).
IV
Leipheimer next contends that he pleaded facts sufficient to demonstrate
violations of the CPA by MERS, ReconTrust, and BAC and that, accordingly, the
trial court erred by dismissing these claims. We agree.
The CPA prohibits "[u]nfair methods of competition and unfair or deceptive
acts or practices in the conduct of any trade or commerce." RCW 19.86.020. In
order to prove a CPA claim, a plaintiff must establish: (1) that the defendant
engaged in an unfair or deceptive act or practice, (2) that the act occurred in
trade or commerce, (3) that the act impacts the public interest, (4) that the
plaintiff suffered injury to his or her business or property, and (5) that the injury
was causally related to the unfair or deceptive act. Panao v. Farmers Ins. Co. of
Wash., 166 Wn.2d 27, 37, 204 P.3d 885 (2009).
In Bain, our Supreme Court concluded that—in circumstances where
MERS claims to act as the beneficiary under a deed of trust—the first element of
a CPA claim is presumptively met. 175 Wn.2d at 117. The court noted that
many courts have determined that it is "deceptive to claim authority when no
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No. 67005-1/11
authority existed and to conceal the true party in a transaction." Bain. 175 Wn.2d
at 117 (citing Stephens v. Omni Ins. Co.. 138 Wn. App. 151, 159P.3d 10(2007),
aff'd. 166 Wn.2d 27, 204 P.3d 885 (2009)). Accordingly, the court explained,
"[t]he fact that MERS claims to be a beneficiary, when under a plain reading of
the statute it was not, presumptively meets the deception element of a CPA
action." Bain. 175 Wn.2d at 119-20. More recently, in Klem v. Washington
Mutual Bank, 176 Wn.2d 771, 787, 295 P.3d 1179 (2013), the court explained
that a trustee's failure to fulfill its duty to a borrower also constitutes a "deceptive
act" within the meaning of the CPA.
Here, in addition to his allegation that MERS was improperly named as the
beneficiary on his deed of trust, Leipheimer identifies several additional acts by
ReconTrust, BAC, and MERS in support of his CPA claims. He asserts, first, that
because ReconTrust was not a properly appointed successor trustee, it
misrepresented its own authority when it issued the notice oftrustee's sale to
Leipheimer. Leipheimer further contends that this notice—issued by ReconTrust
under the direction, Leipheimer asserts, of MERS and BAC—falsely stated that
the default payments were due to MERS when in fact MERS was owed no such
obligation. Finally, he contends that ReconTrust, BAC, and MERS "facilitated a
deceptive and misleading effort to wrongfully execute and record documents
each knew or should have known contained false statements related to the
Appointment of Successor Trustee and Assignment of Deed of Trust."
In light of the Bain and Klem decisions, MERS, ReconTrust, and BAC do
not dispute that their alleged conduct satisfies the first three elements of a CPA
-11 -
No. 67005-1/12
claim. As Leipheimer correctly points out, the notice of default named MERS as
the "creditor to whom the debt is owed." The notice of trustee's sale likewise
named MERS as the beneficiary to whom the underlying obligation was owed.
However, assuming the facts pleaded by Leipheimer to be true, because MERS
did not hold the promissory note, no such payment was owed to MERS.
Moreover, these notices were issued by ReconTrust, a party which, Leipheimer
contends, had no authority to act as trustee. Given our Supreme Court's
recognition in Bain that it is "deceptive to claim authority when no authority
existed and to conceal the true party in a transaction," 175 Wn.2d at 117, the first
element of Leipheimer's CPA claim is satisfied.9
Accordingly, MERS, ReconTrust, and BAC focus their arguments on injury
and causation. They contend, first, that Leipheimer's asserted injuries are not
cognizable CPA injuries and, second, that these injuries did not result from the
deceptive acts alleged by Leipheimer. However, as we noted in Walker, such
arguments are foreclosed by our Supreme Court's decision in Panag. In that
case, the court explained that "the injury requirement is met upon proof the
plaintiffs 'property interest or money is diminished because of the unlawful
conduct even if the expenses caused by the statutory violation are minimal.'"
9ReconTrust, MERS, and BAC do not dispute that Leipheimer pleaded sufficient facts to
satisfy the second and third elements of his CPA claim. With regard to the second element, our
Supreme Court has explained that "there is considerable evidence that MERS is involved with an
enormous number ofmortgages in the country (and our state), perhaps as many as half
nationwide." Bain, 175 Wn.2d at 118. Thus, the courtconcluded, the public interestelement is
presumptively met where MERS is improperly named as beneficiary. Bain, 175 Wn.2d at 118.
The court did not address whether the requirement thatthe act "occur in trade or commerce" is
presumptively met in such circumstances; however, given the subject and purpose of foreclosure
proceedings, ReconTrust, MERS, and BAC concede that the third element of Leipheimer's CPA
claim is also satisfied.
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No. 67005-1/13
Panag, 166 Wn.2d at 57 (quoting Mason v. Mortg. Am., Inc., 114 Wn.2d 842,
854, 792 P.2d 142 (1990)). "Investigative expenses, taking time off from work,
travel expenses, and attorney fees are sufficient to establish injury under the
CPA." Walker. No. 65975-8-I, slip op. at 25 (citing Panag. 166 Wn.2d at 62).
Here, Leipheimer asserts as injuries the costs of investigating the
lawfulness of the notice of trustee's sale, the costs of associated travel, fees
relating to professional consultation, and the loss oftime to pursue business and
personal activities. These injuries, he alleges, were "solely the result ofthe
conduct of the defendants in this action." Under the broad approach to injury and
causation set forth in Panag, such alleged facts are sufficient to support these
elements. Accordingly, because Leipheimer pleaded facts that, if proved, could
satisfy all of the elements of his CPA claims, the trial court erred by dismissing
these claims pursuant to CR 12(b)(6).
V
Leipheimer next asserts that naming MERS as the beneficiary under the
deed of trust renders that instrument a nullity and that, accordingly, the trial court
erred by dismissing his action to quiet title. In the alternative, he asserts that the
deed of trust is unenforceable because it is possible that it has been separated
from the promissory note. We rejected identical arguments in Walker. Adopting
the reasoning set forth in that decision, we reject them here as well. The trial
court did not err by dismissing Leipheimer's action to quiet title pursuant to CR
12(b)(6).
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No. 67005-1/14
VI
Leipheimer's final contention is that he is entitled to an award of attorney
fees and costs on appeal based upon the "terms of the parties' Note and Deed of
Trust." RAP 18.1 permits a prevailing party to recover fees incurred on appeal
where that party is able to recovery such fees at trial. Landberg v. Carlson. 108
Wn. App. 749, 758, 33 P.3d 406 (2001). Here, however, because Leipheimer
has not yet prevailed on the merits of his claims, he is not yet a prevailing party.
See Rvan v. Dep't of Soc. & Health Servs., 171 Wn. App. 454, 476, 287 P.3d 629
(2012). Accordingly, an award of attorney fees would be premature.
We reverse the trial court's order dismissing Leipheimer's claims for
violations of the DTA, the CPA, and section 1692f(6) of the FDCPA. We affirm
the court's dismissals of Leipheimer's claims for violations ofsection 1692e ofthe
FDCPA and its dismissal of his action to quiet title.
We concur:
4^Jt e. /. 6yiJ-
14