IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In the Matter of the Trustee’s Sale of the
) No. 80628-9-I
Real Property of: Bernard Charles Kieper,)
) DIVISION ONE
U.S. BANK NATIONAL ASSOCIATION ND, )
) UNPUBLISHED OPINION
Appellant/Cross-Respondent, )
)
v. )
)
BERNARD CHARLES KIEPER, as a )
separate estate, )
)
Respondent/Cross-Appellant. )
)
HAZELRIGG, J. — U.S. Bank National Association, ND seeks reversal of an
order denying in part its motion to disburse surplus funds from a non-judicial
foreclosure sale. U.S. Bank argues that the trial court either failed to consider or
failed to give proper weight to the business records that it submitted as proof of its
lien. The Estate of Bernard C. Kieper cross-appeals, arguing that the trial court
erred in granting U.S. Bank’s motion in part. Because U.S. Bank produced
sufficient evidence to establish by a preponderance the existence and amount
owed, we reverse the partial denial of the motion.
FACTS
On November 3, 2017, Northwest Trustee Services, Inc. conducted a non-
judicial foreclosure sale on that certain Deed for Trust dated March 7, 2003 and
Citations and pinpoint citations are based on the Westlaw online version of the cited material.
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recorded March 18, 2003 under Whatcom County Auditor’s File No. 2030303565
(Foreclosed Deed of Trust). The Foreclosed Deed of Trust was from Bernard C.
Kieper, as a separate estate, and encumbered, in the first lien position, that certain
real property commonly known as 2424 Verona St., Bellingham, WA 98229-3746.
Surplus funds from the sale totaling $118,520.19 were deposited with the Clerk of
the Whatcom County Superior Court.
On May 15, 2018, U.S. Bank National Association, ND filed a motion
seeking disbursement of $87,559.69 of the surplus funds under RCW 61.24.080.
U.S. Bank attached a copy of a signed “Equiline Agreement” showing that it made
a home equity line of credit loan to Kieper in the principal amount of $84,500 in
January 2006. The Equiline Agreement stated that Kieper could draw on the line
of credit by using one of the checks provided to him by U.S. Bank, using the
provided VISA credit card to make purchases or receive cash advances, or by
attaching the line of credit to a bank account. Cash advances could be obtained
with the VISA credit card via ATM transactions. U.S. Bank also attached a Deed
of Trust from Bernard C. Kieper and Marlene T. Kieper to U.S. Bank as beneficiary,
recorded January 27, 2006 under Whatcom County Auditor’s File No.
2060104426. Finally, U.S. Bank submitted a letter from its foreclosure department
stating the payoff information for Kieper’s loan and showing $84,357.58 in principal
and $3,202.11 in interest for a total of $87,559.69 owed as of the date of the
foreclosure sale. However, the proposed order that U.S. Bank submitted with its
motion stated that $14,981.93 would be disbursed. At a hearing on the motion,
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Judge Charles R. Snyder signed the unopposed Order for Disbursement of
Surplus Funds as presented.
The Kieper Estate sought disbursement of the remaining funds in the court
registry. U.S. Bank then filed a second motion seeking an amended order
disbursing the full $87,559.69 requested in its first motion. U.S. Bank’s motion
explained that the previously signed order erroneously stated the wrong amount.
In support of the motion, U.S. Bank attached the same three loan documents as
well as a transaction history statement for the loan. The Kieper Estate opposed
U.S. Bank’s motion and renewed its motion for disbursement of the remaining
funds, which U.S. Bank opposed.
On February 22, 2019, a hearing on the competing motions took place
before Judge Snyder. The court indicated that the evidence produced by U.S.
Bank was not specific enough for the court to determine with confidence that the
transactions were what they purported to be. The court denied both motions
without prejudice pending production of more detailed evidence.
Both parties again moved for disbursement. In addition to the loan
documents, U.S. Bank submitted a declaration of an employee loan officer. The
officer stated that they were “competent to review loan records and evaluate status
based upon those records” and that they “personally [knew] that the records kept
are done so in the course of regularly conducted business and as a matter of
business routine.” They stated that “[e]ntries in these records are made at or near
the time of the event recorded by or with information from a person with knowledge
of the event recorded.” The transaction history detailing the line items charged to
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the account was attached to the declaration, and the officer provided a detailed
explanation of the transaction codes or categories that appeared in the document.
The officer also stated that the initial draw on the line of credit occurred on January
11, 2006 with a check for $27,758.30 generated to pay off and close another
account. A disbursement summary dated January 11, 2006 documenting the
payment was attached to the declaration.
A hearing on the competing motions took place on August 30, 2019 before
Judge Lee P. Grochmal. Judge Grochmal indicated that there was not “a lot of
additional detail provided by the bank since Judge Snyder made his ruling.” The
court was concerned that the transaction history was “a blanket statement” and
stated that “there must be some documentation that backs up the fact that this
borrower took the money out of the bank.” The court found that there was sufficient
evidence of the $27,758.30 balance advance dated January 11, 2006 and
authorized disbursement of the funds to U.S. Bank in that amount. The court
denied the remainder of the requested disbursement to U.S. Bank with prejudice.
The parties agreed that the Kieper Estate was undisputedly owed at least $30,000
of the funds in the registry, and the court authorized disbursement of that sum.
U.S. Bank appealed the partial denial of its motion. The Kieper Estate cross-
appealed the partial grant of U.S. Bank’s motion.1
1A commissioner of this court entered a notation ruling on December 20, 2019 stating that
the Kieper Estate’s cross-appeal would be considered timely under the circumstances of this case
and allowed both the appeal and the cross-appeal to proceed.
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ANALYSIS
I. Consideration of Business Records
U.S. Bank first argues that the trial court erred in either refusing to admit the
business records or, if the records were admitted, in refusing to give them
appropriate weight.
A. Preservation
The Kieper Estate argues that we should refuse to review U.S. Bank’s
assignments of error because U.S. Bank did not argue before the trial court that
its records should be admissible under the Uniform Business Records as Evidence
Act (UBRA)2 or that the court failed to give weight to the information in its records.
Generally, we will not review an issue that is raised for the first time on appeal and
was not pleaded or argued before the trial court. RAP 2.5(a); Wash. Fed. Sav. v.
Klein, 177 Wn. App. 22, 29, 311 P.3d 53 (2013).
Although U.S. Bank did not specifically argue that the records were
admissible under the UBRA, the sufficiency of U.S. Bank’s evidence as proof of
the debt owed by Kieper was the central issue before the trial court. The parties
briefed and argued this issue before the trial court, giving the court an opportunity
to decide the claim of error. We will review U.S. Bank’s assignments of error.
B. Admission
U.S. Bank contends that it is unclear from the record whether the court
admitted and considered the business records but argues that the court erred
2 Chap. 5.45 RCW.
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either in refusing to admit and consider the records or, if the records were admitted,
in failing to give them appropriate weight. It argues that the orders entered by the
trial court do not refer to the admission or denial of the proffered business records
and the trial court never specified whether it admitted the records in whole or in
part but found them unreliable or refused to consider the records because they did
not meet the standards for admission. The Kieper Estate contends that the trial
court admitted and considered the business records offered by U.S. Bank but
found the evidence to be substantively insufficient.
There is no indication in the record that the court found the records
inadmissible. The Kieper Estate did not object to the admissibility of the records,
and the court did not explicitly engage in an admissibility analysis on the record
during the hearing. In its order disbursing funds to U.S. Bank, the court stated that
it had “considered the Declaration and Exhibits filed in support of [U.S. Bank’s]
motion.” This shows that the court admitted and evaluated the business records,
then based its ruling on the sufficiency of the evidence.
U.S. Bank also argues that the court failed to give the records due weight
under UBRA. The UBRA “makes evidence that would otherwise be hearsay
competent testimony.” State v. Fleming, 155 Wn. App. 489, 499, 228 P.3d 804
(2010). Under RCW 5.45.020, certain requirements must be met to allow
admission of this evidence:
To be admissible under the business records exception, (1) the
business record must be in record form; (2) be of an act, condition,
or event; (3) be made in the regular course of business; (4) be made
at or near the time of the fact, condition, or event; and (5) the court
must be satisfied that the sources of information, method, and time
of preparation justify admitting the evidence.
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Id. Under UBRA, business records are presumptively reliable if made in the
regular course of business and if there was no apparent motive to falsify. Id. In
State v. Fleming, Division Two of this court noted that “[n]o Washington case has
squarely addressed whether a trial court errs by admitting evidence under the
business record exception where there are questions regarding the records’
accuracy” and concluded that contentions of anomalies in the record-keeping went
to the weight of the evidence rather than its admissibility. Id. at 500–01. The
statement in Fleming regarding the presumptive reliability of business records
appears to relate to the admissibility of the records rather than the weight to be
given to the evidence once admitted. U.S. Bank has not shown that the court erred
in its assessment of this evidence.
II. Disbursement
U.S. Bank next contends that the court erred in denying distribution of the
surplus funds to U.S. Bank for the full amount of its claim. When a trial court bases
its decision on distribution of funds under RCW 61.24.080 solely on documentary
evidence, declarations, and memoranda of law, we stand in the same position as
the trial court and review the decision de novo. Matter of Anderson, 8 Wn. App.
2d 41, 45, 436 P.3d 853 (2019). “[A] party claiming surplus funds from a
foreclosure sale under RCW 61.24.080(3) needs to demonstrate the right to assert
the debt and the amount owed by a preponderance of evidence.” Id. at 46.
In arguing that U.S. Bank’s evidence was insufficient to prove its claim, the
Kieper Estate relies primarily on two cases involving collection actions on alleged
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credit card debt: Discover Bank v. Bridges, 154 Wn. App. 722, 226 P.3d 191
(2010), and Citibank S.D. N.A. v. Ryan, 160 Wn. App. 286, 247 P.3d 778 (2011).
U.S. Bank argues that these cases do not support the partial denial of its motion.
In both cases, the trial court granted summary judgment for the banks, which this
court reversed on appeal. Bridges, 154 Wn. App. at 724; Ryan, 160 Wn. App. at
288.
In Bridges, Discover Bank supported its motion for summary judgment with
an affidavit of an employee of an affiliated entity that assisted Discover in collecting
delinquent debts with attached account statements and a cardmember agreement,
as well as a second affidavit explaining the relationship between Discover Bank
and the affiliated entity. 154 Wn. App. at 724–25. Division Two of this court found
that this evidence was not sufficient to establish that there was no genuine issue
of material fact when viewed in the light most favorable to the nonmoving party.
Id. at 726–27. The court found that Discover Bank had not met its burden to show
acceptance of the cardmember agreement and personal acknowledgement of the
account:
Discover Bank’s pleadings disclose neither a signed agreement
between Discover Bank and the Bridgeses nor detailed, itemized
proof of the Bridgeses’ card usage. Nor do they show that the
Bridgeses acknowledged the debt, for example, through evidence of
cancelled checks or online payment documentation. The record
contains only monthly statements summarizing the Bridgeses’
alleged account balance and payments purportedly made thereon
and affidavits from DFS employees, who were familiar with the
Bridgeses’ purported account records.
Id. at 727.
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In Ryan, Citibank supported its motion for summary judgment with an
affidavit of its employee setting forth the total claimed debt with attached monthly
account statements and a six-page unsigned credit card agreement. 160 Wn. App.
at 288. The account statements showed payments made on the account but made
no indication of how the payments were made, nor did they “cover the period in
which the card was first issued or the majority of the debt was accumulated.” Id.
This court, relying on Bridges, found that the “bare notation of supposed payments
on the account statements” was not sufficient to prove Ryan’s personal
acknowledgement of the debt. Id. at 293. We also rejected Citibank’s argument
that a numerical amount under the heading “purchase” on some of the account
statements proved Ryan’s assent to the cardholder agreement by establishing that
he personally used the card:
None of the notations on the statements offered by Citibank here
actually explained what the supposed purchase was or who it was
from. Nor is it clear whether these were individual “purchases” or
were only total amounts for the period covered by the statement.
Moreover, these supposed purchases did not add up to anything
near the total Citibank claimed was owed on the card. And the
account statements did not otherwise provide a basis to match the
listed amounts with any particular charge slip or purchase. The
materials Citibank provided thus did not constitute the detailed and
itemized documentation required by Bridges.
Id.
More recently, we relied on Bridges and Ryan to uphold a grant of summary
judgment for a bank in an action to collect credit card debt in American Express
Centurion Bank v. Stratman, 172 Wn. App. 667, 669, 292 P.3d 128 (2012). In
Stratman, American Express supported its motion for summary judgment with an
employee declaration stating that they had personal knowledge that the records
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were kept in the ordinary course of business, that it was the regular practice to
record transactions on or about the time of occurrence, and that $21,939.37 was
owed on the account. 172 Wn. App. at 670. Attached to the declaration were
account statements addressed to Stratman referencing the same account number
and showing that Stratman had been issued a credit card and had made both
purchases and payments on the account. Id. at 671. An unsigned cardmember
agreement was also attached, which stated that “[w]hen you keep, sign or use the
Card issued to you (including any renewal or replacement Cards), or you use the
account associated with this Agreement (your ‘Account’), you agree to the terms
of this Agreement.” Id. We found that there was no genuine issue of material fact
that Stratman used the credit card because the account statements provided the
date and amount of individual purchases as well as the name of the entity from
whom the goods or services were purchased. Id. at 674. Unlike Bridges and Ryan,
“the information contained in Stratman’s account statements provided a sufficient
basis ‘to match the listed amounts with [a] particular charge slip or purchase.’” Id.
(quoting Ryan, 160 Wn. App. at 293).
Here, in contrast to Bridges and Ryan, U.S. Bank proved the existence and
balance of the lien by a preponderance of evidence. See CR 56; Anderson, 8 Wn.
App. 2d at 46. U.S. Bank produced a signed agreement showing that Kieper
agreed to a home equity line of credit in the amount of $84,500 and a recorded
deed of trust. This evidence was sufficient to establish the existence of its lien
against the surplus funds.
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The evidence submitted by U.S. Bank to establish the balance of the
account was most analogous to the evidence produced in Stratman. The Equiline
Agreement stated that Kieper could draw on the line of credit via check, VISA credit
card, or ATM withdrawal. U.S. Bank submitted a transaction history statement
similar to that submitted in Stratman showing the date, description code, amount,
and principal balance resulting from each transaction. It also presented an
employee declaration explaining the description codes and stating that the record
was created in the usual course of business and at the time of each transaction.
The Kieper Estate argues that the documents submitted by U.S. Bank do
not agree on the amount owed. The transaction history statement showed a total
principal balance of $84,357.58 as of the last entry on April 22, 2019. U.S. Bank
also submitted a letter showing a principal balance of $84,357.58 on Kieper’s
account and interest of $3,202.11 for a total of $87,559.69, the amount of U.S.
Bank’s requested disbursal. Although the loan account balance listed in the letter
is greater than the principal amount of the loan, the signed Equiline Agreement
explicitly permits the addition of unpaid finance charges to the total.
Although the transaction history is less specific than the statements in
Stratman, it is sufficient to show that the balance of the lien was more likely than
not the amount requested by U.S. Bank. The court erred in denying U.S. Bank’s
motion in part.
III. Cross-Appeal
In its cross-appeal, the Kieper Estate argues that the trial court erred in
granting U.S. Bank’s motion for disbursal in part and in disbursing $27,758.30 to
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U.S. Bank. The Kieper Estate contends that U.S. Bank failed to present sufficient
or competent evidence of funds disbursed to the alleged debtor, of the alleged
debtor’s acknowledgement of payments or disbursements, or of any other detailed,
itemized documentation of the alleged debt or transaction. Consistent with the
conclusion above that there was sufficient evidence to show that U.S. Bank was
more likely than not owed the full disbursement of $87,559.69, the court did not err
in granting partial disbursement to U.S. Bank.
The Kieper Estate also requests an award of its attorney fees and costs
under RAP 18.1. A party may request an award of attorney fees and costs if the
applicable law provides the right to recover fees and costs on appeal. RAP 18.1(a).
The Kieper Estate cites to the Equiline Agreement, which entitles U.S. Bank to an
award of reasonable attorney fees and costs in collection actions. The Kieper
Estate argues that this provides a basis for the award it seeks under RCW
4.84.330. This statute provides that when a contract specifically states that one
party is entitled to attorney fees and costs incurred to enforce the contract, the
prevailing party in the action shall be entitled to reasonable attorney fees,
regardless of whether the prevailing party is the party entitled to fees under the
agreement. RCW 4.84.330. Because the Kieper Estate is not the prevailing party
on appeal, the request for attorney fees and costs is denied.
Reversed.
WE CONCUR:
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