Saody Eng, V. Specialized Loan Servicing, Llc

N THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
SAODY ENG, an individual, ) No. 82378-7-I
)
Appellant, )
)
v. )
)
SPECIALIZED LOAN SERVICING, ) PUBLISHED OPINION
a foreign limited liability company, )
)
Respondent. )
)

VERELLEN, J. — The statute of limitations runs against each installment of a

promissory note once it is past due. Time-barred debt remains valid though

unenforceable. A creditor can demand repayment of valid debt without enforcing it.

When, as here, a creditor holds a deed of trust securing an unaccelerated

promissory note with past due installments—some time-barred and some not—the

creditor can demand payment of all past due installments. But if the creditor threatens

to foreclose the deed of trust based upon both actionable and time-barred debt unless

the debtor repays both, then the creditor’s omission that the time-barred debt is

unenforceable has the capacity to mislead the debtor regarding a statute of limitations

defense to the foreclosure. An allegation that the creditor engaged in this type of

deceptive practice in violation of the Consumer Protection Act (CPA), chapter 19.86

RCW, can survive a CR 12(b)(6) motion to dismiss.
No. 82378-7-I/2

A creditor’s mere threats of enforcement actions it can legally take do not violate

RCW 19.16.250(16) of the Collection Agency Act (CAA). Nor does a creditor violate

RCW 19.16.250(21) of the CAA merely by demanding payment of time-barred debt

when the debt remains valid.

Saody Eng filed a complaint alleging Specialized Loan Servicing, LLC, (SLS)

violated the CPA, the CAA, and was negligent when it threatened foreclosure on a deed

of trust because of past due installments that included time-barred debt. The trial court

granted SLS’s CR 12(b)(6) motion to dismiss. SLS omitted disclosing that portions of

the debt were time-barred and unenforceable. Because SLS’s notice of intent to

foreclose created an impression with the capacity to mislead a reasonable consumer

about the availability of a statute of limitations defense, Eng adequately alleged a

deceptive act under the CPA. And because she adequately pleaded the remaining

elements of a prima facie CPA claim, Eng’s CPA claim should not have been dismissed

at this stage of the proceedings.

Because Eng failed to allege a cognizable CAA violation or negligence claim, the

trial court did not err by dismissing those claims.

Therefore, we affirm in part, reverse in part, and remand.

FACTS1

In 2006, Eng purchased a property using two loans, each secured by a deed of

trust. The second loan, which was for $67,990, is at issue here.

1 Because this is an appeal from a CR 12(b)(6) motion to dismiss, all facts are
taken from the operative complaint unless otherwise noted. See Jackson v. Quality
Loan Serv. Corp., 186 Wn. App. 838, 843, 347 P.3d 487 (2015) (“All facts alleged in the
plaintiff’s complaint are presumed true.”) (citing Tenore v. AT&T Wireless Servs., 136
Wn.2d 322, 330, 962 P.2d 104 (1998)).

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No. 82378-7-I/3

In 2008, Eng lost her job and began missing payments. She has not made a

payment toward her second loan since, at the latest, November 1, 2008.

In March of 2019, SLS began servicing the loan. In July of 2019, it sent Eng a

“Default Notice and Notice of Intent to Foreclose”:

Dear Saody Eng,

The Note on the above-referenced loan is now in default as a result
of your failure to pay the 11/01/08 payment and the payments each month
thereafter, as provided for in said Note. You are hereby notified that to
cure such default[,] you are required to pay this office all past due
payments plus late charges . . . The amount required to cure the arrears
as of 07/25/19 is $88,196.01. You have thirty-three (33) days from the
date of this letter to cure the default. We urge you to immediately, upon
receipt of this letter, contact our Customer Assistance Department at the
number provided below to obtain the updated amount required to reinstate
your loan.

....

This notice does not affect your ability to apply for or be evaluated
for a foreclosure prevention option or any pending loss mitigation option
that may have been extended.

Failure to pay the total amount due . . . by 08/27/19 may result in
acceleration of the entire balance outstanding under the Note including . . .
commencement of foreclosure of the Trust Deed/Mortgage[,] which is
security for your Note.[2]

In early October, SLS notified Eng her “mortgage account is delinquent” and sent her a

“Notice of Pre-Foreclosure Options.”3 SLS has not accelerated the note.

2 Clerk’s Papers (CP) at 42 (emphasis added). Because Eng made allegations in
her complaint based upon her deed of trust and this “Default Notice,” the trial court
could consider both documents when evaluating SLS’s CR 12(b)(6) motion to dismiss.
Jackson, 186 Wn. App. at 844 (citing Rodriguez v. Loudeye Corp., 144 Wn. App. 709,
726, 189 P.3d 168 (2008)).
3 CP at 4.

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Eng filed a complaint against SLS in mid-October, alleging it was a collection

agency that violated the CAA, violated the CPA, and committed common law

negligence. SLS filed a CR 12(b)(6) motion to dismiss, which the court granted without

prejudice.4

Eng appealed. SLS moved to dismiss, arguing the trial court order was not

appealable because the court dismissed without prejudice. Commissioner Masako

Kanazawa denied the motion but let SLS raise issues of appealability in its briefing on

appeal.

ANALYSIS

As a threshold matter, SLS argues the trial court’s decision is not reviewable as a

matter of right under RAP 2.2(a) because the trial court dismissed Eng’s complaint

without prejudice. Dismissal of an action with prejudice is a final judgment on the merits

of a controversy.5 A dismissal without prejudice ordinarily does not have preclusive

effect and is not appealable as a matter of right unless the practical effect is to

determine an action by discontinuing it or preventing a final judgment.6 In Barnier v.

City of Kent, for example, this court concluded a CR 12(b)(6) dismissal without prejudice

4Eng’s claim for declaratory judgment was also dismissed, but she does not
assign error to that ruling.
5Berschauer Phillips Const. Co. v. Mut. of Enumclaw Ins. Co., 175 Wn. App.
222, 228 n.11, 308 P.3d 681 (2013) (citing Banchero v. City Council of City of Seattle,
2 Wn. App. 519, 525, 468 P.2d 724 (1970)).
6Wachovia SBA Lending, Inc. v. Kraft, 165 Wn.2d 481, 487, 200 P.3d 683
(2009) (quoting Munden v. Hazelrigg, 105 Wn.2d 39, 44, 711 P.2d 295 (1985));
RAP 2.2(a)(3).

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was appealable because the trial court dismissed the claim as nonjusticable, meaning

the “practical effect of the order was to discontinue the action.”7

Here, like Barnier, the trial court dismissed Eng’s claims because it concluded

they were legally insufficient, essentially adjudicating their merits with the practical effect

of discontinuing the action. Because RAP 2.2(a)(1) allows an appeal as a matter of

right under these circumstances, we will consider Eng’s appeal.

We review a CR 12(b)(6) motion to dismiss de novo.8 Under this generous

standard of review, we presume all factual allegations in the complaint are true, as are

any reasonable inferences from them.9 “‘[A]ny hypothetical situation conceivably raised

by the complaint defeats a CR 12(b)(6) motion if it is legally sufficient to support the

plaintiff's claim.’”10 But dismissal is appropriate when “‘a plaintiff’s claim remains legally

insufficient even under his or her proffered hypothetical facts.’”11

I. Collection Agency Act

Eng alleges SLS violated RCW 19.16.250(16) and .250(21) of the CAA.

RCW 19.16.250(16) prohibits a collection agency from “[t]hreaten[ing] to take any action

against the debtor which the [debt collector] cannot legally take at the time the threat is

7 44 Wn. App. 868, 871, 872 n.1, 723 P.2d 1167 (1986).
8
Jackson, 186 Wn. App. at 843 (citing FutureSelect Portfolio Mgmt., Inc. v.
Tremont Grp. Holdings, Inc., 180 Wn.2d 954, 962, 331 P.3d 29 (2014)).
9 Trujillo v. Nw. Tr. Servs., Inc., 183 Wn.2d 820, 830, 355 P.3d 1100 (2015)
(citing Gorman v. City of Woodinville, 175 Wn.2d 68, 71, 283 P.3d 1082 (2012)).
10Jackson, 186 Wn. App. at 843 (alteration in original) (quoting Bravo v. Dolsen
Cos., 125 Wn.2d 745, 756, 888 P.2d 147 (1995)).
11
Id. at 843-44 (quoting Gorman v. Garlock, Inc., 155 Wn.2d 198, 215, 118 P.3d
311 (2005)).

5
No. 82378-7-I/6

made.” SLS sent a letter threatening foreclosure on $89,562.39 in debt.12 Eng

concedes that SLS has “the right to foreclose on installment payments within the statute

of limitations,”13 and her complaint alleges portions of her debt are within the limitations

period. Thus, Eng agrees that SLS could legally begin foreclosure proceedings against

her, even if she disagrees about the amount of debt to which it was entitled from that

proceeding. Because SLS could legally threaten foreclosure, it did not violate

RCW 19.16.250(16).

RCW 19.16.250(21) prohibits a collection agency from collecting or “attempt[ing]

to collect in addition to the principal amount of a claim any sum other than allowable

interest, collection costs or handling fees expressly authorized by statute.” Under the

CAA, a “claim” is “any obligation for the payment of money or thing of value arising out

of any agreement or contract, express or implied.”14 Thus, subsection .250(21) prohibits

a collection agency from attempting to collect amounts other than principal, interest, and

statutorily authorized costs or fees from an obligation originating in an agreement.

Eng alleged SLS violated this statute by sending the notice of default threatening

foreclosure on a sum of debt, including time-barred debt, from a note secured by a deed of

trust. Although the lapsed limitations period restricts the right to enforce the entire

12SLS does not dispute that its notice of default letter can be read as a threat to
foreclose. Wash. Court of Appeals oral argument, Eng v. Specialized Loan Servicing,
LLC, No. 82378-7 (Oct. 27, 2021), at 15 min. through 15 min., 20 sec.,
https://www.tvw.org/watch/?clientID=9375922947&eventID=2021101139&startStreamAt
=900&stopStreamAt=920&autoStartStream=true.
13 Reply Br. at 10.
14 RCW 19.16.100(2).

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No. 82378-7-I/7

obligation,15 the debt remains valid.16 Eng does not argue her debt was invalid. Because

SLS was demanding payment of principal, interest, and authorized fees from a valid claim,

Eng failed to adequately allege SLS violated RCW 19.16.250(21).

II. Negligence

Eng alleges that SLS breached its common law duty of reasonable care “when it

attempted to collect amounts not legally owed by [her].”17 But Eng acknowledges “she

has not made any of the installment payments since at least 2008.”18 SLS was entitled

to demand payment of valid debt Eng legally owed,19 even if, as explained below, it is

unable to enforce the time-barred portion of Eng’s valid obligation.20 Because time-

barred debt remains valid and owing, Eng failed to allege facts supporting a claim that

SLS breached its duty by attempting to collect amounts not legally owed.

III. Consumer Protection Act

The CPA prohibits “[u]nfair methods of competition and unfair or deceptive acts

or practices in the conduct of any trade or commerce.”21 Eng alleged SLS committed

both a per se CPA violation by violating the CAA and a statutory violation by using

unfair and deceptive collection practices. Because Eng failed to allege a valid CAA

violation, the issue is whether she adequately alleges an unfair or deceptive practice.

15 Pratt v. Pratt, 121 Wash. 298, 303, 209 P. 535 (1922).
16 Jordan by Prappas v. Bergsma, 63 Wn. App. 825, 828, 822 P.2d 319 (1992).
17 CP at 8.
18 Reply Br. at 6.
19 Jordan, 63 Wn. App. at 828.
20 Pratt, 121 Wash. at 303.
21 RCW 19.86.020.

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No. 82378-7-I/8

“The CPA is a particularly appropriate vehicle” for regulating collection practices22

because “debt collection activities that are not regulated under the CAA may constitute

unfair and deceptive practices under the broader scope of the CPA.”23 “To prevail on a

CPA action, the plaintiff must prove an ‘(1) unfair or deceptive act or practice;

(2) occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his

or her business or property; (5) causation.’”24 Washington courts can look to federal

courts for guidance on whether certain business practices violate the CPA.25

SLS argues Eng failed to allege sufficient facts to show the first, third, and fifth

elements of a prima facie CPA claim.

Whether an act was “unfair or deceptive” is a question of law.26 When reviewing

a CR 12(b)(6) dismissal, a plaintiff alleges a deceptive act when their complaint claims

the defendant knowingly failed “‘to reveal something of material importance.’”27 And

when a plaintiff alleges facts showing “‘that the alleged act had the capacity to deceive a

22 Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27, 49, 204 P.3d 885 (2009).
23 Id. at 54-55.
24
Klem v. Wash. Mut. Bank, 176 Wn.2d 771, 782, 295 P.3d 1179 (2013) (quoting
Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780,
719 P.2d 531 (1986)).
Panag, 166 Wn.2d at 47 (citing State v. Reader’s Digest Ass’n, 81 Wn.2d 259,
25

275, 501 P.2d 290 (1972)).
26Bain v. Metro. Mortg. Grp., 175 Wn.2d 83, 116, 285 P.3d 34 (2012) (citing
Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133, 150, 930 P.2d 288
(1997)).
27 Deegan v. Windermere Real Estate/Ctr.-Isle, Inc., 197 Wn. App. 875, 885, 391
P.3d 582 (2017) (internal quotation marks omitted) (quoting Indoor Billboard/Wash., Inc.
v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 75, 170 P.3d 10 (2007)).

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No. 82378-7-I/9

substantial portion of the public,’” then the defendant’s intent is immaterial.28 Deception

exists “‘if there is a representation, omission, or practice that is likely to mislead’ a

reasonable consumer.”29

An accurate communication can still be deceptive.30 Even a truthful statement

can be deceptive if it creates a misleading “net impression.”31

SLS’s notice of intent to foreclose told Eng “that to cure such default[,] you are

required to pay this office all past due payments plus late charges” and that “[t]he

amount required to cure the arrears as of 07/25/19 is $88,196.01.”32 Eng argues this

was deceptive because the amount of debt includes unenforceable, time-barred debt.

SLS contends that because Eng actually owes the amount stated in the notice, “nothing

on the face of SLS’s representation of the amount owed on the loan is a

misrepresentation.”33 Even if literally correct, SLS’s argument overlooks a material

omission in its notice.

28
Behnke v. Ahrens, 172 Wn. App. 281, 290, 294 P.3d 729 (2012) (quoting
Hangman Ridge, 105 Wn.2d at 785)).
Panag, 166 Wn.2d at 50 (quoting Sw. Sunsites, Inc. v. Fed. Trade Comm’n,
29

785 F.2d 1431, 1435 (9th Cir. 1986)).
30 Id.
31 State v. Living Essentials, LLC, 8 Wn. App. 2d 1, 16, 436 P.3d 857 (quoting
id.), review denied, 193 Wn.2d 1040, 449 P.3d 658 (2019), cert. denied, 141 S. Ct. 234,
208 L. Ed. 2d 14 (2020).
32 CP at 42.
33 Resp’t’s Br. at 21.

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No. 82378-7-I/10

Deed of trust remedies are subject to RCW 4.16.020, the six-year statute of

limitations.34 When a debtor is in arrears, a creditor can enforce the debt by acting on

the promissory note or by foreclosing on a security instrument, such as a deed of trust,

if the debtor fails to cure.35 “[W]hen recovery is sought on an installment note, ‘the

statute of limitations runs against each installment from the time it becomes due; that is,

from the time when an action might be brought to recover it.’”36 In Washington, unlike a

majority of lien-theory states, “‘the mortgage creates a lien only, and is an incident to,

and collateral security for, the debt.’”37 Thus, for Washington creditors, any “action upon

the mortgage is barred when the statute of limitations has run against the [entire] debt

which the mortgage was given to secure.”38 Once the limitations period has run on an

installment, the debt from that installment remains valid although time-barred and

34Merceri v. Bank of New York Mellon, 4 Wn. App. 2d 755, 759, 434 P.3d 84
(2018) (quoting Edmundson v. Bank of Am., N.A., 194 Wn. App. 920, 927, 378 P.3d 272
(2016)).
35 RCW 61.24.030, .090.
364518 S. 256th, LLC v. Karen L. Gibbon, P.S., 195 Wn. App. 423, 434, 382
P.3d 1 (2016) (quoting Herzog v. Herzog, 23 Wn.2d 382, 388, 161 P.2d 142 (1945)).
37 Pratt, 121 Wash. at 301-02 (quoting Spokane County v. Prescott, 19 Wash.
418, 423, 53 P. 661 (1898)); see RESTATEMENT (THIRD) OF PROPERTY: MORTGAGES § 4.1
cmt. a(1), at 186 (1997) (noting “a minority of [lien theory states] hold that when the
remedy on the obligation is barred so also is the remedy on the mortgage. This result is
justified on the ground that the mortgage is merely an incident of the obligation and
should not be enforceable if the obligation is not.”).
38 Pratt, 121 Wash. at 303; see 18 W ILLIAM B. STOEBUCK & JOHN W. WEAVER,
WASHINGTON PRACTICE: REAL ESTATE: TRANSACTIONS, § 18.34, at 370 (noting that Pratt is
still “sound” and stands for the rule that a lapsed limitations period bars enforcement of
the debt).

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No. 82378-7-I/11

unenforceable.39 A debtor facing foreclosure can raise the statute of limitations as a

defense to the sale.40

SLS does not dispute that when the limitations period has run on an entire

secured debt, then the creditor cannot enforce it.41 This long-settled rule remains true

whether a creditor elects a judicial or nonjudicial foreclosure.42 If the creditor seeks to

foreclose, the debtor can assert the statute of limitations as an affirmative defense and

seek to quiet title against their mortgage or deed of trust.43

SLS contends that the statute of limitations has no impact on its ability to

foreclose on past due installments that are more than six years old when some

installments remain actionable. Therefore, SLS argues, Eng has no cognizable CPA

39See Jordan, 63 Wn. App. at 828 (“Although enforcement of an obligation may
be barred by the statute of limitation, the obligation does not become void.”).
40Walcker v. Benson & McLaughlin, P.S., 79 Wn. App. 739, 746, 904 P.2d 1176
(1995); RCW 7.28.300.
41 Wash. Court of Appeals oral argument, Eng v. Specialized Loan Servicing,
LLC, No. 82378-7 (Oct. 27, 2021), at 10 min., 10 sec. through 10 min., 36 sec.,
http://www.tvw.org/watch/?clientID=9375922947&eventID=2021101139&startStreamAt=
610&stopStreamAt=636&autoStartStream=true; see Koster v. Wingard, 50 Wn.2d 855,
857, 314 P.2d 928 (1957) (“[A] mortgage cannot exist without a debt.”) (citing Tesdahl v.
Collins, 2 Wn.2d 76, 81, 97 P.2d 649 (1939)).
42 See Hodge v. Truax, 184 Wash. 360, 368-69, 51 P.2d 357 (1935) (“[W]here
the statute of limitations has run against a note which is secured by a mortgage, a right
of action on the mortgage is also barred.”); Walcker, 79 Wn. App. at 746 (holding
RCW 7.28.300 and the Deed of Trust Act, ch. 61.24 RCW, allow the statute of
limitations as a defense in foreclosures of a deed of trust securing entirely time-barred
debt); see also 18 STOEBUCK & W EAVER, § 20.10, at 104 (2d ed. Supp. 2021) (explaining
“non-judicial foreclosure can be begun within six years of any particular installment
default and the amount due can be the then principal amount owing” but an “untimely
sale is time-barred”).
43Walcker, 79 Wn. App. at 746; see Terhune v. N. Cascade Tr. Servs., Inc., 9
Wn. App. 2d 708, 728 n.5, 446 P.3d 683 (2019) (noting a debtor should raise in a
foreclosure proceeding whether time-barred payments can affect the amounts
recoverable in foreclosure).

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No. 82378-7-I/12

claim. For the reasons explained below, we disagree with SLS’s premise. If there are

past due installments, a creditor may enforce the actionable past due installments but

not the time-barred past due installments.44

We applied that rule in Cedar West Apartment Owners Association v. Nationstar

Mortgage, LLC, where nonjudicial foreclosure of a deed of trust based upon past due

installments was allowed for the actionable installments but not for those made

unenforceable by the six year statute of limitations.45 Because each installment

payment was due on the first of each month, the debtor made his last payment in May

of 2010, and the creditor did not initiate foreclosure until mid-October of 2016, we held

the creditor could not foreclose on installment payments from before the November 1,

2010 installment due date.46 Prior Washington decisions applying the statute of

limitations to mortgage and deed of trust foreclosures are generally consistent with this

concept.47

44 See, e.g., George v. Butler, 26 Wash. 456, 468, 67 P. 263 (1901) (“The
mortgage being a mere incident to the note, and its only purpose being to secure the
same, it has fulfilled its purpose, as far as the debt represented by the note is
concerned, when there is no longer a right of action upon the note.”); In re Tragopan
Props., LLC, 164 Wn. App. 268, 270, 273, 263 P.3d 613 (2011) (“The running of the
statute of limitations is generally a bar to an action on an unpaid debt. . . . An action
upon a note or other written instrument must be commenced within six years.”) (citing
RCW 4.16.040).
45 7 Wn. App. 2d 473, 489-90, 434 P.3d 554 (2019).
46 Id.
47 E.g., Pratt, 121 Wash. at 303 (explaining “it seems to be the universal rule in
all those jurisdictions which hold that the mortgage creates nothing but a lien that an
action upon the mortgage is barred when the statute of limitations has run against the
debt which the mortgage was given to secure” and holding a creditor could not foreclose
on an equitable mortgage when the debt was time-barred); George, 26 Wash. at 457-
58, 468 (holding a lender could not foreclose on a time-barred note but could foreclose
on an actionable note when the lender attempted to foreclose on a single mortgage
securing a two notes, one time-barred and one actionable); Tragopan, 164 Wn. App. at

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No. 82378-7-I/13

Courts in Arizona, which has similar mortgage laws, have reached the same

result.48 Like Washington, Arizona also has a six-year limitations period for debt from a

written contract.49 It too follows the minority rule that when its limitations period runs on

a debt, the statute of limitations prevents enforcement of both the debt and a related

security agreement.50 And the limitations period begins to run on each installment from

a promissory note once the installment is past due.51

In Navy Federal Credit Union v. Jones, the Arizona Court of Appeals considered

whether that state’s six-year statute of limitations allowed acceleration and foreclosure

of all installment payments from a promissory note, including past due installments

more than six years old.52 In 1981, a woman and her husband obtained a $13,800 loan

from a credit union, and the promissory note contained an acceleration clause.53 When

the woman and her husband divorced, he assumed the entire debt.54 He died in 1989

270-71 (holding a developer could not foreclose on two deeds of trust it held to secure
promissory notes because the limitations period had run on the notes).
48 E.g., Ortiz v. Trinity Fin. Servs., LLC, 98 F. Supp. 3d 1037, 1042 (D. Ariz.
2015) (holding a creditor could foreclose on actionable installment payments because
“[w]hile some installment payments on the debt are barred by the six-year statute of
limitations, others are not”).
49 Atlee Credit Corp. v. Quetulio, 22 Ariz. App. 116, 117, 524 P.2d 511, 512
(1974).
50 Stewart v. Underwood, 146 Ariz. 145, 148, 704 P.2d 275, 278 (Ct. App. 1985)
(citing De Anza Land & Leisure Corp. v. Raineri, 137 Ariz. 262, 265, 669 P.2d 1339,
1343 (Ct. App. 1983)); see RESTATEMENT (THIRD) OF PROPERTY: MORTGAGES § 4.1 cmt.
a(1), at 186 (noting “a minority of [lien theory states] hold that when the remedy on the
obligation is barred so also is the remedy on the mortgage”).
51
Navy Fed. Credit Union v. Jones, 187 Ariz. 493, 495, 930 P.2d 1007, 1009 (Ct.
App. 1996).
52 187 Ariz. 493, 494, 930 P.2d 1007, 1008 (Ct. App. 1996).
53 Id.
54 Id.

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No. 82378-7-I/14

while in arrears on the note.55 On June 15, 1994, the credit union sued the woman to

enforce the entire debt, and it accelerated the remaining installments.56 The court

concluded the credit union could accelerate future installments and enforce the debt

from unpaid installments from after June 15, 1988, but it could not enforce unpaid

installments from before June 15, 1988, because they were time-barred.57

With this background and on this generous standard of review, 58 the question

presented is whether Eng alleged a cognizable CPA claim under “‘any hypothetical

situation conceivably raised by the complaint.’”59 Specifically, we must resolve whether

a creditor’s notice could deceive a debtor by implying the creditor is entitled to enforce

and receive a particular sum of debt when a portion of that debt is time-barred.

Here, SLS sent Eng a notice of intent to foreclose, stating the sum of her debt

without distinguishing the portion of her debt that was time-barred. The notice stated

that to cure, Eng was “required to pay this office all past due amounts” within 33 days

and “[f]ailure to pay the total amount due under the terms and conditions of your Deed

of Trust/Mortgage” could lead to SLS taking legal action.60 SLS had not accelerated the

note.

The foreclosure notice did not distinguish actionable debt from time-barred debt

and omitted any mention that SLS was barred from enforcing any of the time-barred

55 Id.
56 Id. at 1008-09.
57 Id. at 1010.
58 Trujillo, 183 Wn.2d at 830 (citing Gorman, 175 Wn.2d at 71).
59 Jackson, 186 Wn. App. at 843 (quoting Bravo, 125 Wn.2d at 756).
60 CP at 42.

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No. 82378-7-I/15

debt. Hypothetically, such a threat could leverage a debtor into repaying time-barred

debt to avoid enforcement when the debtor could otherwise seek to bar that debt in a

foreclosure setting.61 The legal status of the debt is material to a reasonable

consumer’s understanding of a creditor’s ability to act and to comprehending their own

legal and financial risk.62 Even if SLS’s letter was technically accurate, omitting the

material information that a portion of the debt was time-barred and unenforceable

created a misleading impression of SLS’s leverage and Eng’s risk.63 Because Eng

alleged facts sufficient to claim SLS’s business practices had the capacity to deceive a

reasonable consumer, her complaint satisfied the first element for a prima facie CPA

claim.64, 65

SLS contends Eng’s allegations do not implicate the public interest. A private

plaintiff bringing a CPA claim can demonstrate their lawsuit serves the public interest

61
See Walcker, 79 Wn. App. at 746 (limitations period defense applies to judicial
and nonjudicial foreclosures and can be raised on a motion to restrain a trustee’s sale);
see also Terhune, 9 Wn. App. 2d at 728 n.5 (application of limitations period to debt can
be raised in a foreclosure action); Cedar W., 7 Wn. App. 2d at 484 (limitations period
runs against installment debt more than six years past due.) (citing Edmundson, 194
Wn. App. at 930).
62Cf. Kaiser v. Cascade Capital, LLC, 989 F.3d 1127, 1134 (9th Cir. 2021)
(“‘Whether a debt is legally enforceable is a central fact about the character and legal
status of that debt.’”) (quoting McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1020
(7th Cir. 2014)).
63
See Living Essentials, 8 Wn. App. 2d at 16 (an accurate claim can be
misleading because of the “net impression” created) (quoting Panag, 166 Wn.2d at 50).
See Panag, 166 Wn.2d at 50 (“Deception exists ‘if there is a representation,
64

omission, or practice that is likely to mislead’ a reasonable consumer.”) (quoting Sw.
Sunsites, 785 F.2d at 1435).
65
The parties do not meaningfully brief and we do not reach whether such an
omission in a notice of default is a violation of the Deed of Trust Act, ch. 61.24 RCW.
Our analysis is limited to whether Eng states a cognizable CPA claim.

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“by showing a likelihood that other plaintiffs have been or will be injured in the same

fashion.”66 Eng alleged that SLS deceived her in the course of its business as a debt

collector and that SLS “regularly attempts to collect third party debts.”67 To defend its

practices, SLS cites to other lawsuits filed in Washington, revealing that SLS has used

similar practices with other consumers.68 On review of a CR 12(b)(6) motion to dismiss,

such allegations are sufficient to satisfy the public interest element.69

SLS argues Eng failed to allege a causal connection between its practices and

her alleged injuries. When a plaintiff alleges deception through omission of a material

fact, a rebuttable presumption of reliance applies.70 Because Eng alleged she incurred

expenses due to a notice with the capacity to mislead by omission, Eng adequately

alleged SLS caused cognizable injuries under the CPA.

Eng alleged SLS’s business practices were deceptive and caused her to be

injured in her person or property. Because she stated a prima facie CPA claim,71 the

trial court erred by dismissing it under CR 12(b)(6).

66Trujillo, 183 Wn.2d at 835 (citing Michael v. Mosquera-Lacy, 165 Wn.2d 595,
604-05, 200 P.3d 695 (2009)).
67 CP at 2.
68
See CP at 11 (citing Nelson v. Specialized Loan Servicing, LLC, No. 3:20-CV-
05461-RBL, 2020 WL 5065292, at *3, (W.D. Wash. Aug. 27, 2020) (debtor alleging a
CPA violation for attempting to collect time-barred debt)).
69See Trujillo, 183 Wn.2d at 836 (concluding the public interest element was met
because the plaintiff alleged the business practices involved the sale of property and
asserted other plaintiffs “have or likely will suffer injury in the same fashion”) (citing
Michael, 165 Wn.2d at 604-05).
70 Deegan, 197 Wn. App. at 890.
71 Klem, 176 Wn.2d at 782 (quoting Hangman Ridge, 105 Wn.2d at 780).

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IV. Attorney Fees

Eng requests attorney fees on appeal pursuant to RAP 18.1 and

RCW 19.86.090. RAP 18.1(a) authorizes an award of attorney fees and costs from

appeal when authorized by law. RCW 19.86.090 entitles a prevailing plaintiff to

reasonable attorney fees from pursuing their CPA claim.72 “‘[A] plaintiff “prevails” when

actual relief on the merits of his claim materially alters the legal relationship between the

parties by modifying the defendant's behavior in a way that directly benefits the

plaintiff.’”73 Eng’s partial success on appeal does not provide “actual relief” because the

claim that survived the CR 12(b)(6) motion is far from resolved. An award of attorney

fees is premature because, at this early stage of the litigation, Eng has not yet

prevailed. If Eng prevails on her claim on remand and the trial court concludes fees and

costs are appropriate, the trial court may award reasonable fees and costs for this

appeal.74

SLS requests attorney fees pursuant to RAP 18.1 and “the terms of Eng’s loan

documents.”75 The prevailing party on appeal may seek reasonable attorney fees when

authorized by contract.76 SLS appears to rely on Eng’s deed of trust, the only loan

document in the record on appeal. Section 25 of the deed of trust provides that the

72
McCallum v. Allstate Prop. & Cas. Ins. Co., 149 Wn. App. 412, 428-29, 204
P.3d 944 (2009) (citing Nuttall v. Dowell, 31 Wn. App. 98, 114-15, 639 P.2d 832 (1982)).
Parmelee v. O’Neel, 168 Wn.2d 515, 522, 229 P.3d 723 (2010) (quoting Farrar
73

v. Hobby, 506 U.S. 103, 111-12, 113 S. Ct. 566, 121 L. Ed. 2d 494 (1992)).
74 See RAP 18.1(i) (trial courts may determine amounts of appellate fees on
remand).
75 Resp’t’s Br. at 26.
76
Edmundson, 194 Wn. App. at 932-33 (citing Thompson v. Lennox, 151 Wn.
App. 479, 491, 212 P.3d 597 (2009)).

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“Lender shall be entitled to recover its reasonable attorneys’ fees and costs in any

action or proceeding to construe or enforce any term of this Security Instrument.”77

Because this action did not seek to construe or enforce the deed of trust, it does not

authorize an award of attorney fees to SLS.

Therefore, we affirm in part, reverse in part, and remand for further proceedings.

WE CONCUR:

77 CP at 37.

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