FILED
COURT OF APPEALS f!!`; I
STATE OF VIASHii-IGTON
2017 OCT -2 011:08
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
DEUTSCHE BANK NATIONAL ) No. 75044-5-1
TRUST COMPANY, as trustee for )
Saxon Asset Securities Trust 2006-2 )
Mortgage Loan Asset Backed )
Certificates Series 2006-2, )
)
Respondent, )
)
v. )
)
MICHAEL SHIELDS; BONNIE )
SHIELDS, )
)
Appellants, )
)
FIDELITY NATIONAL TITLE )
INSURANCE COMPANY; SAXON ) UNPUBLISHED OPINION
MORTGAGE, INC., )
) FILED: October 2, 2017'
Defendants. )
)
VERELLEN, C.J. — Deutsche Bank National Trust Company filed a lawsuit seeking
to judicially foreclose a deed of trust encumbering property owned by Michael Shields.
The trial court granted summary judgment in favor of Deutsche Bank and issued a
decree of foreclosure. Shields and his sister Bonnie appeal, contending that Deutsche
Bank was not entitled to foreclose, notwithstanding its physical possession of the
original note executed by Shields in favor of the lender. We affirm.
No. 75044-5-1-2
FACTS
In 2006, Michael Shields borrowed $380,000 from Saxon Mortgage Inc. To
memorialize the obligation, Shields executed an adjustable rate note. To secure
payment on the note, the parties executed a deed of trust encumbering real property
owned by Shields in Renton, Washington.
Shortly after, Shields's loan was transferred to securitized trust Saxon Asset
Securities Trust 2006-2, Mortgage Loan Asset Backed Certificates Series 2006-2, with
Deutsche Bank National Trust Company designated as the trustee. Also in 2006,
Deutsche Bank took possession of the original note. Saxon Mortgage specifically
endorsed the note to Deutsche Bank and also endorsed the note in blank on an
allonge.1 Neither endorsement is dated.
Shields defaulted on the loan in June 2008 by failing to make payments due
under the terms of the note. In connection with efforts to initiate nonjudicial foreclosure,
Deutsche Bank issued notices of trustee's sale through a successor trustee in 2010 and
again in 2012. Neither sale occurred. Deutsche Bank discontinued the 2012 sale after
Shields filed a lawsuit seeking to enjoin the trustee's sale and raised additional claims
against Deutsche Bank and others. In 2014, the trial court granted summary judgment
in favor of Deutsche Bank and dismissed Shields's claims.
On August 15, 2014, Deutsche Bank filed a complaint for judicial foreclosure.2
Shields moved to-dismiss to the lawsuit. The trial court denied the motion to dismiss
1 A "blank indorsement" is an endorsement that does not identify a person to
whom the instrument is payable. RCW 62A.3-205(b). An "allonge" is a paper attached
to a negotiable instrument for purposes of receiving further endorsements. BLACK'S LAW
DICTIONARY 92(10th ed. 2014).
2 Deutsche Bank subsequently twice amended the complaint.
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No. 75044-5-1-3
and later granted Deutsche Bank's motion for summary judgment and entered an order
of judgment and decree of foreclosure. Shields appeals.
ANALYSIS
We review an order granting summary judgment de novo.3 Summary judgment
is appropriate if there is no genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law.4 "In reviewing a summary judgment order, we
view the facts and all reasonable inferences therefrom in the light most favorable to the
nonmoving party."5
Shields contends summary judgment was improperly granted because Deutsche
Bank was not the holder of the note and had "no legal right to commence foreclosure."6
A deed of trust may be judicially foreclosed to secure the performance of an
obligation to the beneficiary by a borrower on a negotiable instrument such as a
promissory note.7 A "person entitled to enforce" a negotiable instrument is "the holder
of the instrument."8 The "holder" of a note is "[t]he person in possession of a negotiable
instrument that is payable either to bearer or to an identified person that is the person in
possession."6 A note endorsed in blank is payable to the bearer and "may be
3 Deutsche Bank Nat. Trust Co. v. Slotke, 192 Wn. App. 166, 170, 367 P.3d 600,
review denied, 185 Wn.2d 107, 377 P.3d 746(2016).
4 CR 56(c).
5 Holmquist v. King County, 182 Wn. App. 200, 207, 328 P.3d 1000(2014).
6 Appellant's Br. at 2.
7 Slotke, 192 Wn. App. at 171.
8 RCW 62A.3-301; see also Brown v. Dep't of Commerce, 184 Wn.2d 509, 524-
25, 359 P.3d 771 (2015); Bain v. Metro. Mortq. Grp., Inc., 175 Wn.2d 83, 104, 285 P.3d
34(2012).
9 RCW 62A.1-201(b)(21)(A).
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No. 75044-5-1-4
negotiated by transfer of possession alone."10 The holder of the note, which is the
evidence of the debt, has the power to enforce the deed of trust because the deed of
trust follows the note by operation of law.11
It is undisputed that Deutsche Bank possessed the note at all times relevant to
this litigation. Nevertheless, Shields claims that Deutsche Bank could not enforce the
note because the note was specifically endorsed to Deutsche Bank National Trust
Company "as Trustee for the registered holders of Saxon Asset Securities Trust 2006-2
Mortgage Loan Asset Backed Certificates, Series 2006-2," whereas the party seeking
foreclosure as identified by the caption of the complaint is "Deutsche Bank National
Trust Company as Trustee for Saxon Asset Securities Trust 2006-2 Mortgage Loan
Asset Backed Certificates, Series 2006-2."12
Both the endorsement and the complaint identify "Deutsche Bank National Trust
Company" as trustee. Shields cannot demonstrate that the complaint fails to satisfy our
state's liberal notice pleading standards because it omits the phrase "the registered
holders of" in designating the name of the trust.13 Shields also fails to explain why
Deutsche Bank's possession of the note is not dispositive because in addition to the
specific endorsement, the note was also endorsed in blank on the allonge. Deutsche
10 RCW 62A.3-205(b).
11 Bain, 175 Wn.2d at 104 (the deeds of trust act "contemplates that the security
instrument will follow the note, not the other way around").
12 Clerk's Papers(CP)at 1, 960(emphasis added).
13 Pacific Northwest Shooting Park Ass'n v. City of Sequim, 158 Wn.2d 342, 352,
144 P.3d 276(2006)(notice pleading "requires a simple concise statement of the claim
and the relief sought")(citing CR 8(a)); State v. Adams, 107 Wn.2d 611, 620, 732 P.2d
149(1987)("pleadings are to be liberally construed; their purpose is to facilitate a
proper decision on the merits, not to erect formal and burdensome impediments to the
litigation process").
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No. 75044-5-1-5
Bank's production of the original note, endorsed in blank, for inspection by the trial court
was sufficient to prove its status as the holder of Shields's note.14 Finally, the Uniform
Commercial Code, Title 62A RCW, requires only that the trustee, not the beneficiary, be
named as the party to whom the instrument is payable.15 Shields presents no
compelling argument that the failure to reference the "registered holders" of the trust in
the complaint affects the authority of the trustee to enforce the terms of the note.
Shields also points to variances in the name of the trust that appear in
documents executed in 2008 and 2010 which assign a beneficial interest in the deed of
trust.16 But again, the holder is entitled to enforce the terms of the note.17 And Shields
offers no authority suggesting that assignments of interest negotiate the note or
otherwise affect the determination of the entity entitled to enforce the note. As
explained, because it is undisputed that Deutsche Bank possessed the note, both
endorsed in blank and specifically endorsed to Deutsche Bank as trustee, Deutsche
Bank was the holder of the note.
14 See Slotke, 192 Wn. App. at 175-76.
15 RCW 62A.3-110(2)(i) (if an instrument is payable to a trust, "the instrument is
payable to the trustee .. . whether or not the beneficiary or estate is also named").
Shields maintains in his reply brief that this provision is material only to the issue of
whether Deutsche Bank is the holder of the note, but that in order to enforce the deed of
trust, an entity must be both the holder and owner of the note. This position is at odds
with our Supreme Court's analysis. Brown v. Dep't of Commerce, 184 Wn.2d 509, 524-
25, 359 P.3d 771 (2015); see also Slotke, 192 Wn. App. at 173.
16 In the assignment recorded in 2008, Saxon Mortgage, Inc. assigned its
beneficial interest in the deed of trust to "Deutsche Bank National Trust Company" as
trustee for "Saxon Asset Securities Trust 2006-2." CP at 63. The assignment recorded
in 2010 again assigns beneficial interest to Deutsche Bank as trustee, and the name of
the trust matches the name of trust stated in the endorsement on the note. CP at 65.
17 RCW 62A.3-301.
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No. 75044-5-1-6
Shields also claims that Deutsche Bank is not the real party of interest under
CR 17(a) and cannot maintain this legal action as a foreign entity according to
RCW 23.95.505(2). But CR 17(a) explicitly allows a trustee to maintain a legal action.
And even assuming that Deutsche Bank is not registered under the Uniform Business
Organizations Code to do business in Washington state, a separate provision of the
statute, RCW 23.95.520(h), provides that enforcing mortgages or security interests in
property does not constitute doing business for purposes of registration of a foreign
business entity.
Shields also challenges the court's order on procedural grounds. He maintains
that the court granted summary judgment based on Deutsche Bank's representation
that the endorsement on the note exactly matched the caption of the complaint and on
the condition that Deutsche Bank file such a note, but that condition was not met. In
fact, the record shows that although the complete copy of the note including the
endorsement from Saxon Mortgage to Deutsche Bank was not attached to the original
or first amended complaint, the court reviewed the original note at the summary
judgment hearing and determined that the note was specifically endorsed to Deutsche
Bank as trustee. Deutsche Bank's counsel complied with the court's request to scan
and file a copy of the original note to make it a part of the record.
Shields identifies no evidence that creates a genuine issue of material fact about
Deutsche Bank's status as the holder of the note. We therefore decline to address
Deutsche Bank's alternative argument that Shields's arguments are barred by collateral
estoppel.
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No. 75044-5-1-7
Finally, Deutsche Bank argues it is entitled to attorney fees and costs on appeal
pursuant to RCW 4.84.330, RAP 14, and RAP 18.1. RCW 4.84.330 permits a party to
recover reasonable attorney fees and costs in any action on a contract where the
contract provides for this award. Here, the note provides that the lender "will have the
right to be paid back by [the borrower]for all of its costs and expenses in enforcing this
[n]ote to the extent not prohibited by applicable law. Those expenses include, for
example, reasonable attorneys'fees."18 RAP 14.2 provides for an award of costs to the
substantially prevailing party on review, and RAP 18.1(a) allows a party to recover
reasonable attorney fees or expenses on appeal if applicable law grants the party the
right to recover these fees and expenses. Because Deutsche Bank has prevailed on
appeal, its reasonable attorney fees and costs incurred on appeal are awarded upon
compliance with RAP 18.1.
Affirmed.
WE CONCUR:
18 CP at 958.
7