Bank Of New York v. Scott C. Townley

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

No. 69194-5-1
THE BANK OF NEW YORK MELLON
F/K/A THE BANK OF NEW YORK AS DIVISION ONE
TRUSTEE FOR THE
CERTIFICATEHOLDERS CWABS, INC. UNPUBLISHED OPINION
ASSET-BACKED CERTIFICATES,
SERIES 2005-10,
FILED: March 2, 2015
Respondents,

v.

STEPHANIE TASHIRO-TOWNLEY
AND SCOTT C. TOWNLEY,

Appellants.

Leach, J. — Before the nonjudicial foreclosure sale of their home,

Stephanie Tashiro-Townley and Scott Townley filed suit in federal court against

entities associated with the foreclosure, including Bank of New York Mellon

("BNYM"). BNYM later purchased the property at the sale. When it filed an

unlawful detainer action in King County Superior Court, the Townleys filed

counterclaims and other pleadings asserting claims similar to those they raised in

their federal court complaint. The superior court dismissed or denied all of the

Townleys' claims because they exceeded the scope of the unlawful detainer

proceedings. It then granted BNYM a writ of restitution.
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The Townleys appeal, arguing that their counterclaims and other requests

for relief came within the scope of unlawful detainer proceedings. Because we

conclude that the doctrine of res judicata bars the Townleys' claims, we affirm.

FACTS

On July 26, 2005, the Townleys obtained a mortgage loan from

Countrywide Home Loans Inc. They executed a promissory note in the amount

of $297,000 secured with a deed of trust. The deed of trust identified Mortgage

Electronic Registration Systems Inc. (MERS) as the beneficiary.

In January 2009, the Townleys stopped making monthly payments on the

loan. Six months later, the Townleys received a notice of default.

On July 17, 2009, MERS assigned its interest in the deed of trust to

BNYM, as Trustee. BNYM then appointed Northwest Trustee Services Inc.

(NTS) as its successor trustee.1

On September 14, 2010, NTS issued a notice of trustee's sale, scheduling

the sale for October 29, 2010. NTS later postponed the sale to December 3,

2010.

1 In November 2009, the Townleys filed for bankruptcy in the U.S.
Bankruptcy Court for the Western District of Washington. In May 2010, BNYM
moved for relief from the bankruptcy stay. The Townleys opposed the motion,
arguing that BNYM lacked proof that it was the noteholder on the loan and thus
lacked standing. The bankruptcy court denied confirmation of the Townleys'
bankruptcy plan and dismissed the case.

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On November 16, 2010, the Townleys filed a complaint against BNYM,

MERS, and others in federal district court. The complaint alleged irregularities in

the foreclosure sale, wrongful foreclosure, and violations of the deed of trust act2

and Consumer Protection Act (CPA).3 The complaint alleged in part that the NTS

lacked authority to foreclose because it acquired its interest in the property from

BNYM, who in turn acquired its interest by assignment from MERS. Because

MERS did not hold the note at the time of its assignment, the Townleys claimed

that neither BNYM nor its assignee received any interest in the property, making

the foreclosure sale void. The complaint further alleged noncompliance with

statutory notice requirements and unlawful actions designed to manufacture "an

alleged waiver by the [Townleys] of their rights to challenge the sale." They

sought declaratory relief and damages. They did not move to restrain the sale.

On December 3, 2010, BNYM purchased the Townleys' property at the

foreclosure sale.

In March 2011, the Townleys filed an amended complaint in federal district

court, again alleging that the foreclosure sale was unlawful and void.

In June 2011, the federal district court dismissed the Townleys' complaint.

The court ruled that the Townleys waived most of their claims by failing to

restrain the foreclosure sale. The court further ruled that the Townleys failed to

2Ch. 61.24RCW.
3Ch. 19.86 RCW.
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state a claim for relief under the CPA and could not seek injunctive relief under

Title 59 RCW. The Townleys appealed to the Ninth Circuit Court of Appeals.

On February 24, 2012, BNYM filed this unlawful detainer action, seeking

possession of the foreclosed property. The Townleys filed "Counter and Cross

Complaints" against BNYM, MERS, and others. They sought damages and

declaratory and injunctive relief for misrepresentation, fraud, breach of contract,

unjust enrichment, violations of the CPA, and other causes of action. They

alleged that the foreclosure was accomplished via fraudulent business records

and practices.

On March 7, 2012, the Townleys moved to convert the unlawful detainer

proceeding to a proceeding for damages under the court's general jurisdiction.

The court denied the motion. On the same date, the Townleys filed a motion in

federal court seeking relief from the district court's dismissal of their complaint

under Fed. R. Civ. P. 60. The motion alleged newly discovered evidence of

fraudulent business records. The new evidence consisted of affidavits of alleged

experts regarding "robo-signed" documents and other irregularities in records

associated with the foreclosure. The federal court later denied the motion.

On March 8, 2012, the Townleys filed a petition for declaratory relief in the

unlawful detainer proceeding. The petition asserted the same claims raised in

the Townleys' Fed. R. Civ. P. 60 motion, including claims based on robo-signed
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documents. In an attached affidavit, Stephanie Tashiro-Townley alleged that she

first learned of the evidence supporting these claims in December 2011, when

she contacted a "certified fraud examiner and expert." The petition sought a

declaration that BNYM's interest in the property was based on fraudulent

documents and a void foreclosure sale. In the alternative, the petition sought an

order for BNYM to cease and desist any actions "until the facts of new and

relevant evidence of the fraudulent foreclosure ... is properly reviewed by the

[federal] Court."

On April 25, 2012, BNYM moved to dismiss the Townleys' "Counter and

Cross Complaints" under CR 12(b), arguing that they exceeded the scope of

unlawful detainer proceedings. Shortly thereafter, BNYM filed a motion for writ of

restitution for possession of the property.

On May 11, 2012, the superior court denied the Townleys' petition for

declaratory relief. On May 17, 2012, a court commissioner dismissed the

Townleys' "Counter and Cross Complaints" and granted BNYM a writ of

restitution.4 Following unsuccessful motions for revision and reconsideration, the

Townleys appealed.5 We stayed the appeal pending the outcome of the

Townleys' appeal of the federal district court's decision.

4 The May 11 and May 17 orders do not state whether the
dismissals/denials are with or without prejudice.
5 Contrary to BNYM's assertions, the Townleys' appeal was timely filed.
On May 21, 2012, the Townleys timely moved for reconsideration of the order
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On January 21, 2014, the Ninth Circuit affirmed the federal district court's

dismissal of most of the Townleys' claims for relief. The court ruled that the

Townleys' "waived those claims by failing to bring an action to enjoin the

foreclosure sale." The court vacated the dismissal of the Townleys' CPA claim,

however, and remanded for further proceedings. We then lifted the stay in this

appeal and requested and received supplemental briefing on the preclusive

effect of the federal courts' decisions.

DECISION

We must decide if the superior court erred in dismissing the Townleys'

counterclaims and denying their petition for declaratory relief. We review rulings

dismissing or denying claims as a matter of law de novo.6 We may uphold such

rulings on any theory supported by the record.7

The superior court gave two reasons for dismissing the counterclaims and

denying declaratory relief: the Townleys waived the claims by not restraining the

denying their petition for declaratory relief. On May 27, 2012, the Townleys
moved to revise the May 17, 2012, commissioner's rulings dismissing their
counterclaims and granting a writ of restitution. At the July 13, 2012, hearing on
the motion for revision, the superior court rejected arguments that the Townleys'
motion to revise was not filed on May 27, 2012. BNYM has not addressed or
challenged that ruling. On July 13, 2012, the court denied the motions for
revision and reconsideration. The notice of appeal filed on August 10, 2012, was
therefore timely. RAP 5.2(a).
6 In re Pet, of A.S., 91 Wn. App. 146, 157 n.6, 955 P.2d 836 (1998)
(motions to dismiss involving pure questions of law are reviewed de novo), aff'd
138 Wn.2d 898, 982 P.2d 1156 (1999).
7 Korslund v. DvnCorp Tri-Cities Servs., Inc., 121 Wn. App. 295, 317, 88
P.3d 966 (2004).

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foreclosure sale and the claims exceeded the scope of the unlawful detainer

proceeding.8 But because the record includes some evidence that the Townleys

relied to their detriment on representations that the foreclosure sale was on

hold,9 their failure to restrain the sale arguably did not waive their claims.10 And

to the extent their claims bore on their right to possession and damages incident

to the denial of that right, they arguably came within the scope of the unlawful

detainer proceedings.11 We do not resolve those questions, however, because

we conclude that res judicata barred the claims.

8 Both the court and opposing counsel noted that the Townleys could bring
a claim for damages in a separate proceeding.
9 Stephanie Tashiro-Townley alleged that prior to the sale, she received
letters from the bank and the loan servicing agent stating that the sale was on
hold.
10 See Rucker v. NovaStar Mortq., Inc.. 177 Wn. App. 1, 18-19, 311 P.3d
31 (2013) (waiver is applicable only where it is equitable under the
circumstances; no waiver for failure to restrain sale if foreclosed party relied on
misrepresentation that sale would not take place); Cox v. Helenius, 103 Wn.2d
383, 389-90, 693 P.2d 683 (1985) (where a "trustee undertakes a course of
conduct reasonably calculated to instill a sense of reliance" by the borrower and
then acts inconsistently therewith, the foreclosure sale is void); Albice v. Premier
Mortq. Servs. of Wash., Inc.. 174 Wn.2d 560, 571-72, 276 P.3d 1277 (2012)
(where borrower reasonably believed sale would be canceled, purchaser had
constructive knowledge of the procedural defect, and borrower did not sleep on
rights, waiver did not apply). In addition, damage claims based on fraud,
misrepresentation, or the CPA are not waived by failure to restrain the sale.
RCW 61.24.127.
11 Savings Bank of Puqet Sound v. Mink, 49 Wn. App. 204, 208-10, 741
P.2d 1043 (1987) (party in unlawful detainer may raise counterclaim "that will
void the sale and thus destroy any right to possession in the purchaser at the
sale"); Kelly v. Powell. 55 Wn. App. 143, 150-52, 776 P.2d 996 (1989)
(counterclaim for specific performance of option to purchase could be heard in
unlawful detainer proceeding because its resolution was necessary to determine
the right of possession); Peoples Nat'l Bank of Wash, v. Ostrander, 6 Wn. App.
No. 69194-5-1/8

Res judicata prohibits the relitigation of claims that either were litigated or,

in the exercise of reasonable diligence, could have been litigated in a prior

action.12 Courts developed the doctrine to prevent relitigation of previously

determined causes and to curtail harassment in the courts.13 For the doctrine to

apply, there must be a final prior judgment14 and a current action that share an

identity of (1) subject matter, (2) causes of action, (3) persons and parties, and

(4) the quality of the persons for or against whom the claim is made.15 Whether

res judicata applies presents a question of law.16

BNYM argues, and we agree, that each of the prerequisites for res

judicata is present here. The federal district court's decision is a final judgment

on the merits.17 The federal and superior court actions have the same subject

matter—i.e., the sale and right to possession of the Townleys' property. The

28, 31-32, 491 P.2d 1058 (1971) (fraud in foreclosure process is an equitable
defense that can be heard in an unlawful detainer action); Mead v. Park Place
Props., 37 Wn. App. 403, 406, 681 P.2d 256 (1984) (unlawful detainer
proceeding "'is limited to the primary issue of the right of possession, plus
incidental issues such as restitution and rent, or damages'" (quoting Phillips v.
Hardwick, 29 Wn. App. 382, 386, 628 P.2d 506 (1981))).
12 King's Way Foursquare Church v. Clallam County, 128 Wn. App. 687,
693, 116 P.3d 1060 (2005).
13 Bordeaux v. Inqersoll Rand Co., 71 Wn.2d 392, 395, 429 P.2d 207
(1967).
14 Pederson v. Potter, 103 Wn. App. 62, 67, 11 P.3d 833 (2000).
15 Rains v. State. 100 Wn.2d 660, 663, 674 P.2d 165 (1983).
16 Landry v. Luscher, 95 Wn. App. 779, 782-83, 976 P.2d 1274 (1999).
17 For purposes of res judicata, a judgment becomes final at the
beginning, not the end, of the appellate process. City of Pes Moines v. Pers.
Prop. Identified as $81,231 in U.S. Currency, 87 Wn. App. 689, 702, 943 P.2d
669(1997).

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causes of action, or more specifically, the rights, evidence, and transactional

facts involved in the two proceedings, are substantially the same.18 The persons

and parties and the quality of the persons against whom the claims are made are

essentially the same.

The Townleys do not address the elements of res judicata. Nor do they

cite any relevant authority. Courts hold pro se litigants to the same standard as

attorneys and must comply with all procedural rules.19 Under the Rules of

Appellate Procedure, an appellant must provide "argument in support of the

issues presented for review, together with citations to legal authority."20

Arguments not supported by meaningful analysis or citation to pertinent authority

need not be considered.21 Virtually all of the Townleys' arguments in their

supplemental briefs do not comply with these requirements.

Furthermore, as briefed, the Townleys' arguments do not persuade us.

They contend the federal court decisions do not have preclusive effect because

they misapplied Washington law. But for purposes of issue or claim preclusion,

courts generally consider the correctness of the prior decision immaterial so long

18 See Rains, 100 Wn.2d at 664.
19 In re Marriage of Olson, 69 Wn. App. 621, 626, 850 P.2d 527 (1993).
20 RAP 10.3(a)(6).
21 Cowiche Canyon Conservancy v. Boslev. 118 Wn.2d 801, 809, 828
P.2d 549 (1992).
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as the parties received a full and fair opportunity to litigate the issue or claim.22

The Townleys fail to cite any authority supporting an exception to this rule.

The Townleys also contend that they did not discover the evidence

supporting their fraud claim until after the federal district court's decision and

therefore the federal court decisions do not preclude their fraud claim in this

case. They concede, however, that they presented the new evidence to the

federal district court in their motion under Fed. R. Civ. P. 60 for relief from

judgment. The federal court addressed and denied that motion. The Townleys

nowhere explain why that opportunity to challenge the sale based on their new

evidence was insufficient. Nor do they demonstrate that they could not have

discovered the alleged experts and new evidence before the federal district

court's decision by the exercise of due diligence.

Finally, we note that the Townleys' claims based on alleged newly

discovered evidence of fraud were arguably properly dismissed on the ground

that they have no effect on the Townleys' right to possession.23

22 See Thompson v. Dep't of Licensing, 138 Wn.2d 783, 794-800, 982
P.2d 601 (1999) (where party had a full and fair hearing before prior judgment,
interests of finality, judicial economy, and the desirability of avoiding inconsistent
results favor giving preclusive effect to the prior judgment even if it appears
substantively erroneous).
23 See generally Mendoza v. JPMorgan Chase Bank, N.A., 228 Cal. App.
4th 1020, 175 Cal. Rptr. 3d 880 (2014).

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No. 69194-5-1/11

In summary, we conclude that on the briefing presented, the Townleys'

counterclaims and petition for declaratory relief were or could have been litigated

in the federal court proceedings and are therefore barred by the doctrine of res

judicata.24

The Townleys' remaining claims, including their arguments relating to

equal protection and their right to a jury trial, lack merit and/or are rendered moot

by our decision. We deny the parties' requests for attorney fees on appeal.

Affirmed.

WE CONCUR:

24 See Holman v. Tiosevio. 136 Wash. 261, 262-63, 239 P. 545 (1925)
(counterclaim in action to enforce judgment which could have been raised in
action resulting in prior judgment was barred by res judicata).

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