FILED
APRIL 18, 2017
In the Office of the Clerk of Court
WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
ALICE LOPEZ, )
) No. 34968-3-111
Appellant, )
)
v. )
) UNPUBLISHED OPINION
JPMORGAN CHASE & CO., a New York )
Company; JPMORGAN CHASE BANK, )
NA, an Illinois National Association; )
DEUTSCHE BANK NATIONAL TRUST )
CO., a California Company, as Trustee on )
behalf of the holders of WAMU pass- )
through Certificates, Series 2005-AR6; )
NORTHWEST TRUSTEE SERVICES, )
INC., a Washington Corporation; and John )
Does 1-10, )
)
Respondents. )
)
SIDDOWAY, J. -Alice Lopez appeals the summary judgment dismissal of her
challenge to the validity of the nonjudicial foreclosure of the deed of trust on her home. 1
She does not dispute that she was in default in payment of the note secured by the deed of
1 Claims against the defendants under the Consumer Protection Act (CPA),
chapter 19.86 RCW, were also asserted but dismissal of the CPA claims is not a subject
matter of her brief. We do not address it further. See RAP I0.3(a)(6).
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Lopez v. JPMorgan Chase & Co., et al.
trust, but raises now-familiar challenges to the authority of the eventual holder of her note
and the last-appointed trustee to foreclose. We affirm.
FACTS AND PROCEDURAL BACKGROUND
In 2004, Alice Lopez borrowed $264,000 from Washington Mutual Bank
(WaMu), evidenced by a promissory note. The note was secured by a deed of trust on
her home in Vancouver, Washington.
In 2008, the Office of Thrift Supervision closed WaMu and appointed the Federal
Deposit Insurance Corporation (FDIC) as receiver for the bank.
About four years later, in July 2012, the FDIC assigned the deed of trust to
Deutsche Bank National Trust Company (Deutsche) as trustee for a real estate mortgage
investment conduit (REMIC), W AMU Mortgage Pass-Through Certificate Series 2005-
AR6 (Trust). A REMIC is a trust account into which mortgage-backed securities and/or
whole mortgage loans are pooled, for the purpose of reconfiguring their principal and
interest payments into securities having the risk and related investment characteristics
desired by investors. See Cashmere Valley Bank v. Dep 't of Revenue, 181 Wn.2d 622,
627 & n.6, 334 P.3d 1100 (2014). Assignment of the deed of trust to the REMIC was
recorded on August 7, 2012.
In August 2012, Northwest Trustee Services (Northwest), acting as Deutsche's
agent, sent Ms. Lopez a notice of default. According to the notice, Ms. Lopez owed
$291,927.37 on the note as of the date of the notice. Within the next couple of months,
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Deutsche took other steps in furtherance of nonjudicial foreclosure: it appointed
Northwest as successor trustee under the deed of trust (the original trustee had been
Fidelity National Title) and executed a proof of beneficiary declaration stating that as
trustee of the REMIC, it was the holder of the promissory note, an averment on whose
truth and accuracy Northwest could rely.
Northwest took steps to conduct a foreclosure sale over the next three years, but
Ms. Lopez prevented the sale from occurring by filing three successive bankruptcies.
Finally, in August 2015, Northwest filed the amended notice of trustee's sale that
triggered Ms. Lopez to file this lawsuit. She filed suit in October 2015, challenging the
legality of the foreclosure and asserting a violation of the CPA. She moved,
unsuccessfully, to enjoin the sale and then moved, unsuccessfully, for discretionary
review by this court. The property was sold at public auction on November 13, 2015.
A couple of months later, the defendants moved for summary judgment dismissing
Ms. Lopez's complaint. The motions were granted and Ms. Lopez appeals.
ANALYSIS
An order granting summary judgment is reviewed de novo, "considering the
evidence and all reasonable inferences from the evidence in the light most favorable to
the nonmoving party." Keck v. Collins, 184 Wn.2d 358, 370, 357 P.3d 1080 (2015).
Summary judgment is appropriate where there is no genuine issue of material fact and the
moving party is entitled to judgment as a matter oflaw. CR 56(c).
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Ms. Lopez identifies four issues on appeal that she contends made summary
judgment improper. We set them forth as stated by Ms. Lopez's opening brief.
Issue 1: If a court decision irreconcilably conflicts with a constitutionally enacted
statute, must the court decision yield?
Ms. Lopez disagrees with the Washington Supreme Court's decision in Brown v.
Dep'tofCommerce, 184 Wn.2d 509,359 P.3d 771 (2015). In Brown, the court construed
the following language in RCW 6I.24.030(7)(a), which addresses one of the statutory
requisites to a trustee's sale in the nonjudicial foreclosure context:
[F]or 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. A declaration by the beneficiary made under the
penalty of perjury stating that the beneficiary is the actual holder of the
promissory note or other obligation secured by the deed of trust shall be
sufficient proof as required under this subsection.
(Emphasis added.) The court held that the holder of a promissory note-as the party
entitled to enforce the note-is the beneficiary, regardless of whether the holder is also
the owner of the note. Brown, 184 Wn.2d at 546.
Our Supreme Court's decision construing a statute cannot conflict with the statute
as suggested by Ms. Lopez's issue statement, because it is within the courts'
constitutional authority to determine what a statute means. Hale v. Wellpinit Sch. Dist.
No. 49, 165 Wn.2d 494, 505-06, 198 P.3d 1021 (2009) (citing, among other authority,
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Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177, 2 L. Ed. 60 (1803)). This is understood
by the legislature itself, which-even when it has disagreed with a Supreme Court
decision, amended the law, and provided for retroactive application-has nonetheless
recognized that the Supreme Court's construction controls the statute's meaning at least
from the time of the court's decision until the effective date of the amendment. See id. at
502 ( discussing legislative action to statutorily define "disability"). The court decision
does not "yield."
Issue Two: If an assignment of a note and deed of trust is void ab initio, not
voidable, may Plaintiff-Appellant assert the invalidity of the assign[ee 's]
ownership and the beneficiary status [oj] the assignee?
Issue Four: If the acceptance of an assignment of a note and deed of trust into a
trust by the trustee is void, may Plaintiff-Appellant [a]ssert the void assignment
as a basis for denying the trustee the right to foreclose?
Ms. Lopez's second and fourth identified issues relate to her contention that the
FDIC's assignment of her deed of trust to the REMIC in 2005 was void. She contends it
was void for three reasons: (1) it was untimely under the REMIC's pooling and service
agreement, (2) it violated federal statutes relating to REMICs, and (3) it was a
conveyance of property other than by deed. She recognizes that it is essential that
assignment be void, not just voidable, in order for her to have standing. As a nonparty to
the assignment, she has no standing to assert matters that would merely make that
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assignment voidable by the FDIC or the REMIC. 2 Ms. Lopez's second and fourth
assignments of error fail because she does not demonstrate that the assignment was void.
Pooling and service agreement
Ms. Lopez contends the assignment to the Trust was void because it was untimely
under the REMIC's pooling and service agreement (PSA), which she alleges in her
complaint had a "closing date" of April 26, 2005. Clerk's Papers (CP) at 7. The PSA is
not in the record on appeal and the defendants answered the complaint, with respect to
the allegation of the closing date, that the PSA "speaks for itself." CP at 135, 142. The
PSA might well have stated that the trust would acquire no assets after a 2005 closing
date: the name of the REMIC includes "2005," postclosing asset acquisitions can have
2
"Nothing can be founded upon an act or transaction that is absolutely
void, but, from such as are merely voidable, good titles may spring. And
every stranger may take advantage of a void act, but not so of a voidable
one."
"A voidable sale passes the legal title subject to be avoided by a
direct proceeding for that purpose, and it is not subject to a collateral attack.
It may be ratified. But a void sale conveys no title, is incapable of
ratification, and may be shown to be a nullity even in a collateral
proceeding."
Murray v. Briggs, 29 Wash. 245, 257, 69 P. 765 (1902) (citation omitted) (quoting 28
AM. &ENG. ENC. LAW 474 (1895); Moody's Heirs v. Moeller, 72 Tex. 635, 10 S.W. 727
(1889)); see also Yvanova v. New Century Mortg. Corp., 62 Cal. 4th 919,933,365 P.3d
845, 199 Cal. Rptr. 3d 66 (2016) (stating this is the majority rule with respect to a
borrower's right to challenge an assignment or appointment); Reinagel v. Deutsche Bank
Nat. Tr. Co., 735 F.3d 220,225 (5th Cir. 2013); Eric A. Zacks & Dustin A. Zacks, A
Standing Question: Mortgages, Assignment, and Foreclosure, 40 J. CORP. L. 705, 721
n.94 (2015).
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negative tax consequences for a REMIC, and the defendants do not contest the closing
date in their briefing. But without a copy of the PSA, we will not assume that such a
closing date, even if it exists, would make a post-closing transaction void rather than
voidable.
It would be unusual to provide that a future transaction, even if not permitted by a
contract, would be void. Making such a transaction voidable ordinarily provides just as
much protection as making it void. And making such a transaction merely voidable
provides parties with the flexibility to address unforeseen events. It is therefore more
likely that any post-closing asset acquisition that violated the PSA would be voidable
under the agreement rather than void.
In addition to presenting an inadequate record, the only two cases cited by Ms.
Lopez as holding that assignment of an asset after a REMIC's closing date is void do not
help her. She cites Glaski v. Bank ofAmerica, 218 Cal. App. 4th 1079, 1083, 160 Cal.
Rptr. 3d 449 (2013) and Yvanova v. New Century Mortgage Corp., 62 Cal. 4th 919, 365
P.3d 845, 199 Cal. Rptr. 3d 66 (2016).
In Glaski, which involved a REMIC trust created under New York law, the
California court relied for New York law on Wells Fargo Bank, NA v. Erobobo, 39 Misc.
3d 1220(A), 972 N.Y.S.2d 147 (Sup. Ct. 2013) (unpublished opinion), rev'd, 127 A.D.3d
1176, 9 N.Y.S.3d 312 (2015). Glaski held, as had the intermediate New York court in
Erobobo, that transfer of a loan into a trust in violation of the trust's pooling and service
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agreement was void under the New York Estates, Powers and Trusts Law§ 7-2.4. 218
Ca. App. 4th at 1095-96. The intermediate appellate court's decision in Er~bobo was
later reversed, however. See Erobobo, 127 A.D.3d at 1178. New York's highest court
found that a mortgagor like Ms. Lopez lacks standing to challenge a violation of a
pooling and servicing agreement:
In any event, Erobobo, as a mortgagor whose loan is owned by a trust, does
not have standing to challenge the plaintiffs possession or status as
assignee of the note and mortgage based on purported noncompliance with
certain provisions of the [pooling and servicing agreement].
Id. at 1178. Since the intermediate appellate court was wrong in Erobobo, then Glaski,
having relied on the intermediate appellate court's decision, was wrong as well.
And California decisions subsequent to Yvanova have held that the court in
Yvanova "did not consider or decide whether the assignment of the plaintiffs deed of
trust to the investment trust after the trust's closing date rendered the assignment void,
and not merely voidable." Yhudai v. lmpac Funding Corp., 1 Cal. App. 5th 1252, 1257,
205 Cal. Rptr. 3d 680 (2016), review denied, No. S327080 (Cal. Oct. 26, 2016). Cases
considering Yvanova and Glaski have concluded that an assignment to a trust after the
trust's closing date is merely voidable. See Yhudai, 1 Cal. App. 5th 1258 (listing cases
rejecting the holding of the intermediate appellate court in Erobobo); Saterbak v.
JPMorgan Chase Bank, NA, 245 Cal. App. 4th 808, 815, 199 Cal. Rptr. 3d 790 (2016).
Ms. Lopez therefore presented neither evidence nor legal authority in support of her
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position that the FDIC's assignment was in violation of the REMIC's PSA and thereby
void.
Federal statutes dealing with REMICs
Ms. Lopez next argues that federal statutes dealing with REMICs "prohibit" the
assignment made by the FDIC to the REMIC. Br. of Appellant at 18-20. They do not.
They impose a tax on what are defined as "prohibited transactions." The very fact that
they impose a tax on such transactions demonstrates that such transactions can, and
presumably will, take place.
REMICs benefit from protection from double taxation of income; under 26 U.S.C.
860A, the general rule is that a REMIC "shall not be subject to taxation under this
subtitle" and, instead, "[t]he income of any REMIC shall be taxable to the holders of
interests in such REMIC." 26 U.S.C. 860A(a), (b).
Subsection 860F includes "[o]ther rules" applicable to REMICs, one of which is
the taxation ramifications of "prohibited transactions":
There is hereby imposed for each taxable year of a REMIC a tax
equal to 100 percent of the net income derived from prohibited transactions.
26 U.S.C. 860F(a)(l). "Prohibited transactions" include "any income attributable to any
asset which is neither a qualified mortgage nor a permitted investment." 26 U.S.C.
860F(a)(2)(B). The definitions of "qualified mortgage" and "permitted investments"
would exclude, generally, mortgages acquired in 2012 by a REMIC all of whose interests
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were issued in 2005.
All this shows, however, is that if the REMIC in this case closed its issuance of
interests in 2005, then the net income from the foreclosure of a mortgage assigned to it in
2012 would appear to be a "prohibited transaction" on which a 100 percent tax would be
imposed. None of the parties has attempted to explain why, if that were the case, the
REMIC would gain anything by accepting the assignment. From the point of view of the
federal government, however, the assignment is not illogical: the amount ultimately
realized from a mortgage the FDIC acquired in bailing out a failed bank ends up being
paid to the U.S. Treasury through a 100 percent tax. We do not need to understand the
motivation for the assignment to conclude that it does not afford a basis for Ms. Lopez to
avoid responsibility for the $291,927.37 owed on her note.
Conveyance other than by deed
Ms. Lopez's final argument is that the assignment was void because it violates the
statutory requirement that all interests in real property be transferred by deed.
RCW 64.04.010 provides: "Every conveyance of real estate, or any interest
therein, and every contract creating or evidencing any encumbrance upon real estate,
shall be by deed." Over a century ago, interpreting nearly identical language, the
Washington Supreme Court held that an assignment of a mortgage is not subject to this
requirement:
Gen. Stat. § 14 22, prescribes that "all conveyances of real estate, or of any
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interest therein, and all contracts creating or evidencing any encumbrance
upon real estate, shall be by deed." It is not necessary to say that an
assignment of a mortgage is none of these.
Howardv. Shaw, 10 Wash. 151, 156, 38 P. 746, (1894). As was explained in Bain v.
Metropolitan Mortgage Group., Inc., 175 Wn.2d 83,285 P.3d 34 (2012), which involved
a deed of trust rather than a mortgage:
In Washington, "[a] mortgage creates nothing more than a lien in
support of the debt which it is given to secure." Pratt v. Pratt, 121 Wash.
298,300,209 P. 535 (1922) (citing Gleason v. Hawkins, 32 Wash. 464, 73
P. 533 (1903)); see also [18 WILLIAMB. STOEBUCK&JOHNW. WEAVER,
WASHINGTON PRACTICE: REAL ESTATE: TRANSACTIONS § 18.2, at 305 (2d
ed. 2004)]. Mortgages come in different forms, but we are concerned here
only with mortgages secured by a deed of trust on the mortgaged property.
These deeds do not convey the property when executed; instead, "[t]he
statutory deed of trust is a form of a mortgage." 18 STOEBUCK & WEA VER,
supra, § 17.3, at 260. "More precisely, it is a three-party transaction in
which land is conveyed by a borrower, the 'grantor,' to a 'trustee,' who
holds title in trust for a lender, the.'beneficiary,' as security for credit or a
loan the lender has given the borrower." Id. Title in the property pledged
as security for the debt is not conveyed by these deeds, even if "on its face
the deed conveys title to the trustee, because it shows that it is given as
security for an obligation, it is an equitable mortgage." Id. (citing GRANT
S. NELSON & DALE A. WHITMAN, REAL ESTATE FINANCE LAW § 1.6 (4th
ed. 2001)).
Bain, 175 Wn.2d at 92-93. See also Deutsche Bank Nat'/ Tr. Co. v. Slotke, 192 Wn. App.
166, 177-78, 367 P.3d 600 (2016), review denied, 185 Wn.2d 1037, 377 P.3d 746 (2016)
(observing that ordinarily the transfer of the debt secured by a mortgage operates as an
equitable assignment of the mortgage).
The FDIC's assignment did not have to be by deed.
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Issue 3: In the absence ofproof of ownership of a mortgage note secured by a
deed of trust, is the alleged holder of the note authorized by Washington law to
enforce the deed of trust?
The Washington Supreme Court held in Brown:
[T]he holder of the note [is] the beneficiary for the purposes of the
[foreclosure fairness act] mediation exemption statute .... We further hold
that a party's undisputed declaration submitted under penalty of perjury that
the party is the holder of the note satisfies the [Deed of Trust Act's] proof
of beneficiary provisions, RCW 61.24.030(7)(a) and RCW 61.24.163(5)(c).
The holder of the note satisfies these provisions and is the beneficiary
because the legislature intended the beneficiary to be the party who has
authority to modify and enforce the note.
184 Wn.2d at 514.
We have already explained why we ignore Ms. Lopez's disagreement with the
holding in Brown. She also argues that Brown is distinguishable from her case. She
appears to place significance on the facts that (1) Brown involved a known owner of the
note (the Federal Home Loan Mortgage Corporation) and (2) in Brown, "consideration"
had been given for the transfer of the note. Reply Br. at 20. But neither of these facts
was relevant to the court's holding. The holding, which turned on the court's conclusion
that Washington's Uniform Commercial Code, Title 26A RCW, authorizes division of
note ownership from note enforcement and allows the holder to enforce the note, and the
court's recognition of the importance of this division of ownership and enforcement
rights to conventional residential lending practice. Id. at 520-23, 525-26.
Finally, Ms. Lopez argues that in Brown, the proof of authority to enforce that a
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trustee must have in hand before recording the notice of trustee's sale was satisfied by an
"undisputed declaration under penalty of perjury that [the party] is the actual holder of
the promissory note"-whereas she clearly disputed Deutsche's declaration, as evidenced
by her lawsuit. Brown, 184 Wn.2d at 54 7 (emphasis added). Here, the defendants
demonstrated at summary judgment that Deutsche was the actual holder of the
promissory note by having Deutsche bring the original promissory note to the summary
judgment hearing. This is proof that Deutsche was the actual holder of the promissory
note that is even better than an undisputed declaration.
Brown is materially indistinguishable from this case. The holder of the note is the
beneficiary under a deed of trust that secures it, and is entitled to enforce without proof of
ownership.
We affirm the dismissal of Ms. Lopez's complaint.
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to RCW
2.06.040.
dldhl{)
WE CONCUR:
Siddoway, J. 0o
Pennell, J.
13