Ann Marshall, Esq.

The Western District Court of Washington has reversed the Bankruptcy Court’s decision in Meyer v. U.S. Bank in its entirety. UTA had filed an amicus brief in the case. Ann Marshall, Esq., of Bishop, Marshall & Wiebel, filed the brief on behalf of the Association.

In the case, the court had originally held that even though the correct note holder was identified in the NOD and NOS, the trustee could not rely on the servicer for identifying the note holder. The court ruled that the borrower was damaged and with attorney fees the judgment against the trustee exceeded $74,000. The trial court had found the trustee was liable for damages under Washington’s Deeds of Trust Act and violation of Washington’s Consumer Protection Act, based upon the representations made by the beneficiary. UTA’s brief argued that “These actions did not violate the trustee’s duties under the DTA, did not prejudice the grantors of the deed of trust, nor did they violate Washington’s Consumer Protection Act.”

The District court held:

• The Meyers’s claims were not barred by judicial estoppel when they failed to amend their schedules to include this claim, because it would inequitable as the case law underlying their claims arose two years after the Meyers filed bankruptcy. The assertion of the claims against NWTS was not clearly inconsistent with their failure to list the claims in their schedules. Thus the court went on to evaluate the merits of the claims.
• There can be no cause of action for violation of the Deed of Trust Act when the foreclosure sale did not occur. (Citing Frias.)
• The trustee did not breach its duty of good faith by not investigating whether the servicer had the requisite authority to issue the Beneficiary Declaration, and by accepting the Loss Mitigation Form from ASC without evidence that ASC was the authorized agent of U.S. Bank.
• A trustee has a duty to investigate only when it knew about conflicting information regarding its right to initiate foreclosure, or when the beneficiary declaration contained an inherent ambiguity. (Citing Lyons).
• A technical violation of the Deed of Trust Act is not in itself sufficient to constitute an unfair or deceptive practice.
• The fact that the trustee issued the Notice of Default as the beneficiary’s agent was not a deceptive practice. The trustee “indisputably had authority either way to issue the Notice,” and because the Meyers made no showing of prejudice by the trustee’s reference to itself as an agent rather than trustee.
• Inclusion of the same address for the Owner and Servicer in the Notice of Default did not violate the Consumer Protection Act because the Meyers were unable to point to any way in which they were deceived or otherwise prejudiced by only receiving a phone number for the servicer. Even if the trustee did not strictly comply with the statute, its deviation was only a technical one, and liability cannot lie where the Meyers could not show at trial that the practice was likely to deceive.
• The damages alleged were not proximately caused by any of the alleged unfair or deceptive acts.

The court held “In essence, as amici [UTA] point out, Judge Overstreet held NWTS to an affirmative duty to investigate the veracity of the representations contained in the declarations on which it relied.”