                                                                                                             FILED
                                                                                                   COURT OF APPEALS
                                                                                                           DIVISION 11

                                                                                               2015 APR 114         AM 9: 52

                                                                                               STA" '               SI-II h GTON


      IN THE COURT OF APPEALS OF THE STATE OF WASHING
                                                                                                   BY_      h
                                                 DIVISION II


 MARK          A.   VELASCO        and        DANIKA    E.                      No. 45642 -7 -I1
 VELASCO, and the marital community thereof,

                                      Appellants,


          v.

 DISCOVER              MORTGAGE               COMPANY;                    UNPUBLISHED OPINION
 COMMUNITY                    LENDING,              INC.;
 NORTHWEST TRUSTEE SERVICES, INC.;
 WELLS FARGO BANK; HSBC BANK USA
 NATIONAL ASSOCIATION as Trustee for
 WFMBS 2007 -011, WELLS FARGO HOME
 MORTGAGE, MERS CORP, INC., a Delaware
 Corporation;         MORTGAGE           ELECTRONIC
 REGISTRATION                 SYSTEMS,          INC.,       a

 Delaware Corporation; the property located at
 136    Sargent       Road,    Winlock,       Washington;
 DOES          1 - 1000;   ROES     1 - 20;    GENERAL
 RETIREMENT SYSTEM OF THE CITY OF
 DETROIT; NEW ORLEANS RETIREMENT
 SYSTEM,


                                      Respondents.




         MAXA, P. J. —        Mark and Danika Velasco appeal the trial court' s dismissal on summary

judgment of their multiple claims relating to their efforts to modify the loan on their residence

and the attempt to foreclose on the deed of trust securing the that loan. The Velascos filed suit

against Wells Fargo Bank, the loan servicer and holder of the promissory note evidencing the

loan; Mortgage Electronic Registration System ( MERS),                 the designated beneficiary of the deed

of   trust; HSBC Bank, the      assignee of     MERS'   s   beneficial interest in the deed   of   trust   and   Wells
45642 -7 -II




Fargo'   s principal; and    Northwest Trustee Services ( NWTS), the successor trustee that initiated


foreclosure proceedings on the deed of trust.


          The Velascos argue that the trial court erred in granting summary judgment because they

had   valid claims   for ( 1)    violation of   the Deed       of    Trust Act (DTA), chapter 61. 24 RCW, because


NWTS      was not authorized          to initiate foreclosure proceedings; ( 2) violation of the Consumer


Protection Act (CPA), based on Wells Fargo' s conduct during the loan modification process and

on the conduct of MERS, NWTS, Wells Fargo, and HSBC regarding the identity of the deed of

trust   beneficiary; ( 3)   negligence,       based   on a   duty     of care   arising from the CPA; (4) quiet title on


their property because the transfer of their promissory note into a security pool discharged the

note; and ( 5) declaratory relief.

          We hold that ( 1) the Velascos cannot bring DTA claims as a matter of law because no

party has foreclosed        on   their property, ( 2)   the trial court erred in granting summary judgment on

the Velascos' CPA claim against Wells Fargo because there is a genuine issue of material fact as

to   whether   Wells Fargo'      s   loan   modification conduct was unfair or                deceptive, ( 3) the trial court


properly dismissed the remainder of the Velascos' CPA claims because they failed to

demonstrate that there were unfair or deceptive practices and /or that there was a causal link


between the act and their alleged damages, ( 4) the trial court properly dismissed the Velascos'

negligence claim      because the        respondents     did   not owe     them    a   duty   of care, (   5) the trial court


properly dismissed the Velascos' quiet title claim because the transfer of their promissory note

into a security pool did not discharge their note, and ( 6) the Velascos waived their declaratory

relief claim    by failing to        present argument on       it.
45642 -7 -II




          Accordingly, we reverse the trial court' s summary judgment dismissal of the Velascos'

CPA claim against Wells Fargo relating to the loan modification process, but we affirm the trial

court' s summary judgment dismissal of all the Velascos' remaining claims.

                                               FACTS


Promissory Note and Deed of Trust

          In June 2007, the Velascos borrowed $ 577, 400 from ComUnity Lending to refinance

their property in Lewis County, and they executed a promissory note for the loan. The note was

secured by a deed of trust, which listed the Velascos as borrowers, ComUnity as lender, MERS

as beneficiary, and Lewis County Title Company as trustee. The deed of trust provided for the

trustee' s nonjudicial foreclosure of the property if the Velascos defaulted on the promissory note.

          A few weeks later, ComUnity indorsed the note to Wells Fargo. At all relevant times in

this case, Wells Fargo was the Velascos' loan servicer. Wells Fargo apparently was acting as

HSBC' s agent. At some point, ownership of the loan was transferred to the " WFMBS 2007 -011

trust,"   of which HSBC was the trustee. Clerk' s Papers ( CP) at 60. Wells Fargo retained

possession of the promissory note. In January 2012, Wells Fargo indorsed the promissory note

in blank. But Wells Fargo still had possession of the promissory note at the time of the summary

judgment motion.


Initial Loan Modification Process


          Mark Velasco submitted a lengthy declaration describing the circumstances surrounding

the Velascos' claims. In December 2007, catastrophic flooding in Lewis County impacted the




                                                  3
45642 -7 -II




Velascos' ability to make their January 2008 loan payment. Marks contacted Wells Fargo and

was informed that the Velascos did not need to make another payment for 90 days because they

were victims of a natural disaster. When Mark received the March 2008 statement in mid -

February, it showed that the Velascos were required to pay the three missed payments in a

balloon payment along with their March payment. Mark claims that he was not informed that

they would need to make a balloon payment if they suspended payments for 90 days.

        The Velascos had not recovered financially by March 2008, so Mark contacted Wells

Fargo in an attempt to modify their mortgage. Wells Fargo told him to file a financial hardship

letter with Wells Fargo' s Loss Mitigation Department, which he did. Wells Fargo also told Mark


not to make their monthly payments because that would negatively impact Wells Fargo' s review

process of their financial documents. Following Wells Fargo' s review process, the Velascos

were put on a   90 -day   payment plan, also   known   as a "   Special Forbearance Agreement."   CP at


201.   Under this agreement, the Velascos were required to pay the full amount of the loan

payments ($    3, 127. 58) for June, July, and August of 2008 to be considered for a loan

modification




          In August 2008, Mark informed Wells Fargo that the Velascos could not make a required


balloon   payment on   September 1.. Wells Fargo instructed the Velascos to resubmit their


financial statements and draft a new hardship letter, which they did on August 26. Wells Fargo

stated that once it received this information it would determine whether the Velascos qualified

for a loan modification. When Mark called two weeks later, Wells Fargo told him that the




1 For clarity, we refer to Mark Velasco by his first name. No disrespect is intended.
                                                       4
45642 -7 -II




Velascos' house had been put into foreclosure status because they had broken the plan. Wells

Fargo also referred to the fact that the Velascos had not made the required balloon payment.

        Mark challenged the foreclosure status, questioning how Wells Fargo could put the

Velascos into foreclosure when they were in the middle of the loan modification process. Wells

Fargo continued to state that the foreclosure was started because the Velascos had broken the

plan. Later Mark discovered that the real reason Wells Fargo had started the foreclosure was that

it had not received the updated financial information the Velascos had faxed. Mark discovered

that the fax number he had been using since March 2008 to send information had been changed

but was still accepting faxes.

Foreclosure Proceedings


        On October 15, 2008, NWTS —as the        authorized agent of         HSBC —sent the Velascos a


notice of default. At that time, NWTS had not yet been appointed as the successor trustee of the


deed of trust.


        On November 17, 2008, MERS, as the purported deed of trust beneficiary, executed an

assignment of its beneficial interest in the Velascos' deed of trust to " HSBC Bank USA, National

Association,     as   Trustee for WFMBS 2007 -011."       CP   at   193. Earlier, on November 3, 2008,


Wells Fargo, as agent of HSBC, had appointed NWTS as the successor trustee under the deed of

trust. Both of these documents were recorded on November 19, 2008.


        When the Velascos did not cure their default, NWTS recorded a notice of trustee' s sale in

December 2008, which scheduled a foreclosure sale of the property for March 2009. Mark

began contacting attorneys and filed a claim with the Office of the Comptroller of the Currency




                                                      5
45642 -7 -II



 OCC) to challenge the foreclosure. For reasons that are not in the record, the trustee' s sale later

was postponed indefinitely.

Subsequent Loan Modification Activities


        The Velascos entered into a second 90 -day special forbearance agreement for April, May,

and June of 2009 in which they made payments of $2, 000 per month. Wells Fargo told Mark

that once they completed the plan, there would be another loan modification review. A Wells

Fargo employee told Mark that she was in direct contact with the investors who owned the loan,

so a decision could be made quickly. The Velascos then were put on a third 90 -day forbearance

agreement starting in July 2009 with monthly payments of $2, 588. 51 and a fourth 90 -day plan

starting October 2009 with monthly payments of $3, 067. 44. But Wells Fargo never offered them

a permanent loan modification. Wells Fargo continued to state that it was denying the Velascos'

applications for loan modifications because the investors would not allow modification. Wells


Fargo claimed that it did not have the ability to make decisions on the loan.

        In February 2010, NWTS recorded a discontinuance of the trustee' s sale cancelling the

foreclosure sale. The record does not show why the foreclosure proceedings were cancelled.

        The Velascos contacted OCC at least twice regarding their complaints over the summer

of 2010. Following OCC' s request, Wells Fargo sent the Velascos a response regarding their

 rescission and   loan   modification requests."   CP at 284. The record is unclear as to the effect of


these communications.




                                                      6
45642 -7 -II




Lawsuit and Summary Judgment

        Mark alleges that he eventually learned that Wells Fargo had lied to him about their

ability to obtain a loan modification. He learned that their loan had been securitized in the

WFMBS 2007 -011 trust, which was funded by Wall Street investors. Therefore, it would have

been impossible for Wells Fargo to have consulted with the investors. Further, Mark learned that


the servicing agreement between the investors and Wells Fargo granted Wells Fargo the ability

to modify the terms of the loan if a default was reasonably foreseeable.

        In April 2011, the Velascos filed suit against Wells Fargo, HSBC, MERS,, and NWTS


asserting claims for violation of the DTA and CPA, negligence, quiet title, and declaratory relief.

After discovery, Wells Fargo, MERS, HSBC and NWTS moved for summary judgment in

September 2013.    The trial court granted the motion and dismissed all of the Velascos' claims.


        The Velascos appeal.


                                                ANALYSIS


A.      STANDARD OF REVIEW


        The trial court dismissed all of the Velascos' claims on summary judgment. We review a

trial court's order granting summary judgment de novo. Lyons v. U.S. Bank Nat' l Ass 'n, 181

Wn. 2d 775, 783, 336 P. 3d 1142 ( 2014). We review the evidence in the light most favorable to


the nonmoving party and draw all reasonable inferences in that party' s favor. Lakey v. Puget

Sound   Energy, Inc., 176 Wn.2d 909, 922, 296 P. 3d 860 ( 2013).

        Summary judgment is appropriate where there is no genuine issue of material fact and the

moving party is   entitled   to judgment as a   matter of   law. Loeffelholz   v.   Univ. of Wash., 175


Wn.2d 264, 271, 285 P. 3d 854 ( 2012). A genuine issue of material fact exists where reasonable



                                                      7
45642 -7 -II



minds could differ on the facts controlling the outcome of the litigation. Dowler v. Clover Park

Sch. Dist. No. 400, 172 Wn. 2d 471, 484, 258 P. 3d 676 ( 2011).          If reasonable minds can reach


only one conclusion on an issue of fact, that issue may be determined on summary judgment.

Failla   v.   FixtureOne    Corp., 181 Wn.2d 642, 649, 336 P. 3d 1112 ( 2014).

B.       VIOLATION OF THE DEED OF TRUST ACT


         The Velascos argue that NWTS violated the DTA because it acted both as the beneficiary

and as the trustee and undertook actions as a trustee before the appointment of successor trustee


was recorded. They argue that MERS and HSBC violated the DTA because MERS' s assignment

of the deed of trust to HSBC was invalid. They also generally assert that Wells Fargo violated

the DTA. We hold that the trial court properly dismissed the Velascos' DTA claims because no

party actually has foreclosed on their property.

          In Frias v. Asset Foreclosure Services Inc., our Supreme Court held that a plaintiff could


not maintain a claim for monetary damages under the DTA in the absence of a completed

foreclosure     sale of   the property.   181 Wn.2d 412, 422, 334 P. 3d 529 ( 2014). In this case, the


record shows that there has been no completed foreclosure of the Velascos' property.

Accordingly, based on Frias we hold that the Velascos cannot bring claims for damages under

the DTA, and we affirm the trial court' s summary judgment dismissal of the Velascos' DTA

claims.2




2 The trial court dismissed the Velascos' DTA claim on other grounds. However, we can affirm
the trial court on any basis. Rainier View Court Homeowners Ass 'n, Inc. v. Zenker, 157 Wn.
App.   710, 723, 238 P. 3d 1217 ( 2010) ( stating      that an appellate court " may sustain a trial court on
any correct ground, even one the trial court did not consider. ").
                                                         8
45642 -7 -II



C.       VIOLATION OF THE CONSUMER PROTECTION ACT


         The Velascos argue that each of the defendants violated the CPA. We hold that the


Velascos presented sufficient evidence to create a material issue of fact regarding whether Wells

Fargo' s loan modification conduct violated the CPA, but not regarding whether Wells Fargo' s

other conduct violated the CPA or whether MERS, HSBC, or NWTS violated the CPA.


          1.      Elements of CPA Claim


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


practices      in the   conduct of    any trade      or commerce."    RCW 19. 86. 020. Under RCW 19. 86. 090,


any person injured in his or her business or property by a violation of RCW 19. 86. 020 may bring

a civil action     to   recover actual    damages.       Panag v.    Farmers Ins. Co. of Wash., 166 Wn.2d 27, 37,


204 P. 3d 885 ( 2009). To prevail on a CPA claim, a plaintiff must prove ( 1) an unfair or


deceptive      act or practice, (     2) occurring in trade   or commerce, (    3) affecting the   public   interest, ( 4)


injury to a person' s business or property, and ( 5) causation. Id. Whether a plaintiff can prevail

on a CPA claim is a case by case determination of whether the plaintiff can satisfy each of the

five   elements.        Lyons, 181 Wn.2d        at   785. A CPA claim based on alleged DTA violations must


meet the same requirements. Id.


         Here, the respondents do not dispute for summary judgment purposes that their conduct

occurred in trade or commerce or that their conduct affects the public interest.3 Instead, they




3 In Bain v. Metropolitan Mortgage Group Inc., our Supreme Court recognized that because
MERS     was     involved     with " an enormous number of mortgages            in the country ( and our state)," its
                                               interest impact                  CPA  claim. 175 Wn.2d 83, 118,
conduct would           satisfy the   public                     element of a

285 P. 3d 34 ( 2012).



                                                                 9
45642 -7 -II




argue that they did not engage in any unfair or deceptive practices, that their conduct did not

cause the Velascos to incur any economic loss, and that the Velascos cannot establish that any

alleged unfair or deceptive practices caused an economic injury. Accordingly, we only address

those elements of the CPA claims.


                  a.    Unfair or Deceptive Act or Practice


           A plaintiff can establish an unfair or deceptive act or practice by showing " a per se

violation of statute, an act or practice that has the capacity to deceive substantial portions of the

public, or an unfair or deceptive act or practice not regulated by statute but in violation of public

interest." Klem        v.   Wash. Mut. Bank, 176 Wn.2d 771, 787, 295 P. 3d 1179 ( 2013).   The legislature


has defined certain violations of the DTA as unfair or deceptive acts or practices. RCW

61. 24. 135( 2). 4 However, the Velascos do not argue that there is a per se unfair or deceptive act

here. Therefore, we must determine whether the conduct identified by the Velascos has the

capacity to deceive substantial portions of the public or is in violation of public interest. Klem,

176 Wn.2d at 787.


           Conduct is " deceptive" under the CPA if it misleads or misrepresents something of

material     importance. Walker       v.   Quality Loan Serv. Corp., 176 Wn. App. 294, 318, 308 P. 3d 716

 2013).      Neither intent nor actual deception is required to prove a deceptive act. Bain v. Metro.

Mortg. Gip.,       175 Wn.2d 83, 115, 285 P. 3d 34 ( 2012). The question is whether the conduct has




4"
     It is ...   an unfair method of competition in violation of the consumer protection act,
      19. 86 RCW, for any person or entity to: ( a) Violate the duty of good faith under
chapter

RCW 61. 24. 163; ( b) fail to comply with the requirements of RCW 61. 24. 174; or ( c) fail
to initiate contact with a borrower and exercise due diligence as required under RCW
61. 24. 031."

                                                          10
45642 -7 -1I



the capacity to deceive a substantial portion of the public. Id. Even accurate information may be

deceptive if a representation, omission, or practice is likely to mislead. Id.

           Whether conduct is unfair or deceptive is a question of law, not a question of fact. Lyons,


181 Wn.2d at 786. But whether conduct has the capacity to deceive is a question of fact.

Walker, 176 Wn. App. at 318.

                     b.   Injury to Person' s Business or Property

           A CPA plaintiff must establish an injury to the person' s business or property. The

injuries   compensable under           the CPA     are "   relatively   expansive."   Frias, 181 Wn.2d at 431.


Quantifiable monetary loss is not required. Id. The injury requirement is met upon proof the

plaintiffs " `       property interest or money is diminished because of the unlawful conduct even if the

expenses caused           by the   statutory   violation are minimal.' "        Panag, 166 Wn.2d at 57 ( quoting

Mason      v.   Mortg. Am., Inc.,      114 Wn.2d 842, 854, 792 P. 2d 142 ( 1990)). " Investigative expenses,


taking time off from work, travel expenses, and attorney fees are sufficient to establish injury

under   the CPA."          Walker, 176 Wn. App at 320.

           On the other hand, personal injuries such as mental distress, embarrassment, and


inconvenience, and the financial consequences of such injuries, do not satisfy the injury to

business        or   property   element.   Frias, 181 Wn. 2d      at    431.   Further, having to prosecute a claim

under the CPA is insufficient to show injury. Panag, 166 Wn.2d at 60.

           Whether a CPA claimant has suffered injury to business or p
                                                                     _ roperty is a question of fact.

See id. at 65.




                                                                 11
45642 -7 -II



                 c.      Causation


          A CPA plaintiff must establish that the defendant' s conduct caused the alleged injury.

Our Supreme Court has adopted the proximate cause standard embodied in WPI 15. 01. 5 Indoor

Billboard /Wash., Inc.            v.   Integra Telecom of Wash., Inc., 162 Wn.2d 59, 82 -83, 170 P. 3d 10


2007). Under this standard, to prove causation, the " plaintiff must establish that, but for the


defendant' s     unfair or        deceptive   practice,   the   plaintiff would not   have   suffered an   injury."   Id. at


84. Causation is a question of fact. Klem, 176 Wn.2d at 795.


          2.      Claims Against Wells Fargo —Loan Modification.


          The Velascos argue that Wells Fargo violated the CPA during the loan modification

process by ( 1) misrepresenting that the " investors" would not allow modification when in fact

Wells Fargo had authority to modify the loan, and ( 2) deceiving them by repeatedly requesting

information and requiring forbearance payments pursuant to their loan modification request

when Wells Fargo never intended to modify the loan. We hold that the Velascos produced

sufficient evidence to create a genuine issue of material fact on this issue.


                  a.     Unfair or Deceptive Practices


          First, the Velascos allege that Wells Fargo representatives told Mark that the Velascos


could not obtain a loan modification because investors in the WFMBS 2007 -11 trust would not


allow it. However, Mark discovered that the servicing agreement between Wells Fargo and the

investors      states   that "[   w] ith the prior written consent of the master servicer, the servicer may

modify the terms of a Mortgage loan which is in default or a Mortgage Loan as to which default



5
    6 WASHINGTON PRACTICE: WASHINGTON PATTERN JURY INSTRUCTIONS:                                   CIVIL 15. 01, at 181.
    5th ed. 2005).

                                                                   12
45642 -7 -II



is reasonably foreseeable."        CP at 296. Wells Fargo is identified as both the Master Servicer and


the Servicer in the servicing agreement. Therefore, there is sufficient evidence to create a

question of fact that Wells Fargo misrepresented the reason it repeatedly refused to process the

Velascos' loan modification request. Further, the evidence supports at least an inference that

Wells Fargo misrepresented that it had communicated with the investors of the trust regarding

the loan modification request.


           Second, the Velascos allege that Wells Fargo forced them to endure a drawn out loan


modification process when it never intended to modify the loan. If this allegation was true, it

could be characterized as an unfair or deceptive act. The Velascos present no direct evidence


that Wells Fargo had no intent to modify their loan, but the issue is whether the evidence gives

rise to a reasonable inference of that fact. The Velascos allege that Wells Fargo repeatedly gave

false reasons for not processing the Velascos' loan modification request and continued to offer

the Velascos temporary forbearance plans without ever offering a permanent modification.

Given this evidence, it is reasonable to infer that Wells Fargo never intended to modify the

Velascos' loan. Such an inference is sufficient to create a question of fact.


           We hold that the Velascos produced sufficient evidence to create a genuine issue of


material fact as to whether Wells Fargo engaged in unfair and deceptive conduct during the loan

modification process.



                b.     Economic Injury and Causation

            Mark' s declaration contains only two sentences on injury. He alleges that the Velascos

 have spent hundreds of hours writing letters, making phone calls and doing research in order to

find   a   way to   save our   home"   and   that   they have " spent thousands   of   dollars in legal fees."   CP at



                                                             13
45642 -7 -II




210. The first statement does not allege injury under the CPA because there is no indication of

any economic loss. However, the second statement clearly alleges economic loss.

        The question here is causation. Fees incurred bringing the CPA claim are insufficient to

show an economic injury. •Panag, 166 Wn.2d at 60. Therefore, only those fees incurred apart

from the CPA litigation constitute an economic injury under the CPA. Here, there is evidence in

the record that the Velascos hired an attorney to challenge Wells Fargo' s conduct and to fight the

foreclosure actions triggered by Wells Fargo' s refusal to fairly process the Velascos' loan

modification requests. This evidence is sufficient to create a genuine issue of fact regarding the

causal connection between Wells Fargo' s unfair or deceptive acts and the Velascos' payment of


attorney fees.

        Because questions of fact exist regarding unfair or deceptive conduct, injury, and

causation, we hold that the trial court erred in granting summary judgment in favor of Wells

Fargo on the Velascos' CPA claim regarding the loan modification process.

        3.     Claims Against Wells Fargo —Deed of Trust


        The Velascos argue that Wells Fargo also violated the CPA by claiming to be the

beneficiary of the deed of trust after the closing of the WFMBS 2007 -11 trust. We hold that the

Velascos'    contentions with regard to the WFMBS 2007 -11 trust fail to demonstrate an unfair or


deceptive act.


        Although the Velascos' argument is somewhat unclear, it seems to contain two separate


contentions: (   1) Wells Fargo was not validly appointed as the deed of trust beneficiary, and ( 2)

even if Wells Fargo was a valid beneficiary, it was improperly appointed after the closing date of

the WFMBS 2007 -11 trust. The record does not support either contention.


                                                   14
45642 -7 -1I




          First, Wells Fargo was the actual holder of the promissory note. Therefore, under RCW

61. 24. 005( 2),   Wells Fargo was the valid beneficiary of the deed of trust. Bain, 175 Wn.2d at 98-

99. It did not have to rely on any assignment to obtain beneficiary status.

          Second, the Velascos essentially argue that Wells Fargo' s claim of beneficiary status

after the closing date of the WFMBS 2007 -11 trust was unfair or deceptive. The Velascos

contend that Wells Fargo' s claim that it was the beneficiary created confusion and prevented

them from identifying the owner of the note, prevented their direct communication with the

lender,   and " served   the   purpose of   creating   a   default that the Velascos   could not cure."   Br. of


Appellant at 22. But the Velascos failed to bring forward any evidence to support this argument.

While they argued that the transfer of their loan into the WFMBS 2007 -11 trust precipitated

unfair or deceptive acts by Wells Fargo and others, the Velascos failed to show the basic fact that

their loan had even been transferred into the trust. In addition, they failed to produce evidence of

the closing date of the trust. Consequently, even had the trial court found that it was improper to

appoint Wells Fargo the beneficiary after the closing date of the WFMBS 2007 -11 trust, there

were insufficient facts in the record to create a genuine issue of material fact on this issue.

          We hold that the Velascos did not present sufficient evidence to create a question of fact

that Wells Fargo engaged in unfair or deceptive acts with regard to the deed of trust. Therefore,


we affirm the trial court' s summary judgment dismissal of the Velascos' CPA claim against

Well Fargo based on the deed of trust.




                                                             15
45642 -7 -II



        4.        Claims Against MERS


        The Velascos argue that MERS violated the CPA by acting as the beneficiary of the deed

of trust when it was not the holder of the promissory note. We hold that these facts could

establish an unfair or deceptive act, but that the Velascos did not produce sufficient evidence to


create a genuine issue of fact that MERS' s conduct caused economic injury to them.

                      a.    Unfair or Deceptive Act


        The Velascos' deed of trust identified MERS as the beneficiary. And MERS assigned its

beneficial interest in the deed of trust to HSBC. However, the DTA defines a beneficiary of a

deed of trust as " the holder of the instrument or document evidencing the obligations secured by

the deed     of   trust."   RCW 61. 24. 005( 2).   The evidence here shows that Welts Fargo was the


holder of the note at all relevant times, and there is no evidence that MERS ever was the holder.

Therefore, MERS was not a lawful beneficiary of the deed of trust. Bain, 175 Wn. 2d at 99.

        In Bain, our Supreme Court stated that characterizing MERS as a beneficiary when it was

not the note holder had the capacity to deceive, and therefore presumptively met the unfair or

deceptive practice requirement of the CPA. Id at 117. Under Bain, we hold that the Velascos

produced sufficient evidence to create a question of fact that MERS engaged in unfair or

deceptive practices.




                                                          16
45642 -7 -II



                b.    Economic Injury and Causation

        As stated above, the Velascos produced evidence that they incurred attorney fees as a

result of the initiation of foreclosure proceedings. However, the Velascos produced no evidence


that MERS 's conduct had anything to do with the foreclosure proceedings. 6 Further, although

MERS may have engaged in unfair or deceptive conduct by acting as the beneficiary of the deed

of trust when it was not the holder of the promissory note, there is no evidence that this conduct

caused any injury. Accordingly, we hold that the Velascos did not produce sufficient evidence to

create a question of fact on the causation element, and that the trial court did not err in

dismissing the Velascos' CPA claims against MERS.

          5.   Claims Against NWTS


          The Velascos argue that NWTS violated the CPA because ( 1) an NWTS employee also

was an officer of MERS, and ( 2) NWTS sent the Velascos a notice of default before it was

appointed as successor trustee. We hold that even when viewed in the light most favorable to

Velascos, neither of these acts was unfair or deceptive.


                 a.   Common Employee of NWTS and MERS


          The Velascos point out that a person named Jeff Stenman, who was an NWTS employee,

also signed the deed of trust assignment from MERS to HSBC as a vice president of MERS. The




6 In the Velascos' brief, they argue that they incurred " investigative expenses, legal fees, and loss
of work time, as well as additional late fees, inspection fees, and damage to credit" based on
MERS' conduct. Br. of Appellant at 25. However, other than the legal fees there is no evidence
that they incurred these expenses. And there is no evidence that they incurred any expenses as a
result of MERS' s conduct. Bare allegations cannot create a genuine issue of material fact. Club
Envy ofSpokane, LLC v. Ridpath Tower Condo. Ass' n, 184 Wn. App. 593, 337 P. 3d 1131, 1136
 2014).

                                                  17
45642 -7 -II



Velascos contend that this conduct violated RCW 61. 24. 020, which prohibits the same entity

serving as both trustee and beneficiary under the same deed of trust, and therefore was unfair or
deceptive. We disagree.


        We need not address whether the violation of RCW 61. 24. 020 can constitute an unfair or


deceptive practice for two reasons. First, as discussed, MERS was not the beneficiary under this

deed of trust because it was not the holder of the promissory note. Therefore, NWTS' s

employment of a MERS officer could not have resulted in NWTS acting as both the trustee and

beneficiary.

        Second, MERS' s assignment of its beneficial interest in the deed of trust was recorded on

the same day as the appointment of NWTS as successor trustee. Therefore, even if MERS was a

lawful beneficiary, it was not the trustee at the same time that MERS was the beneficiary.

        We reject the Velascos' argument that NWTS engaged in an unfair or deceptive practice


solely because NWTS and MERS had a common employee.

                       b.   NWTS' s Authority to Send Notice of Default

        The Velascos argue that NWTS' s conduct was unfair or deceptive because NWTS sent

the Velascos a notice of default before NWTS' s appointment as successor trustee. We disagree.

           Under RCW 61. 24. 031( 1)(       a),   a trustee, beneficiary, or authorized agent has authority to

send a notice of default of a deed of trust. NWTS did send the Velascos a notice of default on

October 15, 2008, before NWTS had been appointed successor trustee. However, NWTS was

not acting as the trustee when it sent the notice of default. Instead, the notice of default stated

that the   beneficiary —HSBC —was sending the notice and that NWTS was signing the notice as

HSBC'      s"   duly   authorized agent."   CP at 183.



                                                            18
45642 -7 -II



           Under these circumstances, it is irrelevant that NWTS had not been appointed as a

successor trustee when it sent the notice of default to the Velascos. NWTS was


authorized under RCW 61. 24. 031( 1)( a) as the beneficiary' s agent to send the notice.

Therefore, we hold that NWTS did not engage in an unfair or deceptive practice by

sending the notice of default.

           Because we hold that the Velascos did not produce sufficient evidence to create a


genuine issue of material fact that NWTS engaged in unfair and deceptive practices, we


affirm the trial court' s summary judgment dismissal of the Velascos' CPA claims against

NWTS.


           6.        Claims Against HSBC


           The Velascos' brief states in a heading that the actions of Wells Fargo and HSBC were

deceptive, but then only addresses Wells Fargo' s conduct. The Velascos do not expressly argue

that HSBC engaged in unfair or deceptive conduct, and do not cite to the record or any authority

to support such an argument. Further, although the Velascos assert that HSBC is liable under the


CPA based on Wells Fargo' s conduct, they provide no argument and cite no authority to support

this claim. As a result, we hold that the Velascos have waived any such argument. RAP

10. 3(   a)(   6);   Granville Condo. HomeownersAss' n v. Kuehner, 177 Wn. App. 543, 555, 312 P. 3d

702 ( 2013) (        refusing to further address issue where party failed to present sufficient argument or

citation       to authority).   Therefore, we affirm the trial court' s summary judgment dismissal of the

Velascos' CPA claims against HSBC.




                                                         19
45642 -7 -II



D.      NEGLIGENCE


          The Velascos argue that each of the defendants is liable for negligence in breaching their

independent duties owed to the Velascos under the CPA. We hold that a CPA violation does not


give rise to a cause of action for common law negligence.?


          A negligence action may proceed only if the plaintiff shows ( 1) a duty of care was owed .

to them   by   the defendant, ( 2) that       duty was    breached, ( 3) that breach was the cause of their harm,


and (4) they suffered injury as a result. Keller v. City ofSpokane, 146 Wn.2d 237, 242 -43, 44

P. 3d 845 ( 2002).    The issue here is the existence of a duty, which is a question of law that we

review de novo. Aba Sheikh v. Choe, 156 Wn.2d 441, 448, 128 P. 3d 574 ( 2006).


          The Velascos' only argument is that the respondents' negligence duty arises from the

CPA. Specifically, the Velascos devote one sentence in their opening brief to this issue, which

states only that the CPA " prohibits unfair or deceptive business practices in the course of trade or

commerce, and       this is   a   statutory   duty that   clearly   applies   to these Respondents."   Br. of


Appellant at 31.


          The Velascos do not cite any authority that the CPA gives rise to the existence of a

general duty of care. Nor has independent research discovered any precedent holding that the

CPA gives rise to this purported additional duty of care. Accordingly, we hold that the Velascos'




7 The respondents argue that the Velascos' negligence claim is barred by the independent duty
doctrine. However, under Elcon Construction, Inc. v. Eastern Washington University, 174
Wn.2d 157, 165 -66, 273 P. 3d 965 ( 2012), we are constrained from applying the doctrine to cases
other than those involving real property or construction. See Hendrickson v. Tender Care
Animal Hosp. Corp., 176 Wn. App. 757, 770 -71, 312 P. 3d 52 ( 2013), review denied, 179 Wn.2d
1013 ( 2014).

                                                              20
45642 -7 -II




have failed to demonstrate that the respondents owed them a duty of care, and therefore that the .

trial court did not err in dismissing the Velascos' negligence claim on summary judgment.

E.        QUIET TITLE CLAIM


          The Velascos argue that the trial court erred in dismissing their quiet title claim because

the transfer of their promissory note into a mortgage- backed securities pool discharged the note.

We disagree because Washington law does not provide that transfer of the note into a mortgage -

backed securities pool discharges the Velascos' debt obligation on the note.


          An action to quiet title is an equitable proceeding designed to resolve competing claims

of   property ownership.     Walker, 176 Wn. App. at 322. A borrower can maintain a quiet title

action against a beneficiary of a deed of trust only if the debt that the deed of trust secures is

discharged. Evans v. BAC Home Loans Servicing LP, No. c10- 0656 -RSM, 2010 WL 5138394,

at *   3 ( W.D. Wash. Dec. 10, 2010).       The Velascos do not argue that they have paid their

underlying     debt   obligation   to discharge the   note under   RCW 62A. 3- 601(   a).   Instead, they assert

that they have superior title in this case because the transfer of the promissory note into a

mortgage- backed securities pool discharged the note, and therefore discharged the Velascos'


debt obligation.


          The Velascos cite no authority to support their argument. And although Washington

courts have yet to address this issue, several federal courts have addressed and rejected the


argument that securitization inherently changes the legal relationship between the parties to a

promissory note and deed of trust.$



8
 Lane v. VitekReal Estate Indus. Grp., 713 F. Supp. 2d 1092, 1099 ( E. D. Cal. 2010) ( " The
argument that parties lose their interest in a loan when it is assigned to a trust pool has also been

                                                          21
45642 -7 -II




        We hold that securitization does not discharge the Velascos' obligation to pay the

promissory note. The reason for this holding was explained by the Ninth Circuit Bankruptcy

Appellate Panel:


           H] oine loan borrowers are not purchasing an investment when they enter into a
        loan agreement to purchase or refinance a home. When they sign a promissory note
        and mortgage or trust deed secured by their real property, they are entering into a
        contract     for   a   loan transaction     on   fixed   terms,   and   any "   upside"   or investment
        incentive to enter into the transaction is based on a prospective increase in the value
        of   the           property. Accordingly, the
                   subject real                                       borrower' s loan contract ( the Note
        and    Trust Deed in this appeal) is distinct                 and separate from any securities
        transaction in the " secondary market" encompassing assignment of the contract.

In re Nordeen, 495 B. R. 468, 479 -80 ( B. A.P. 9th Cir. 2013).


        Here, the Velascos have not shown that they have discharged their loan obligation by

paying their debt. Nor have they cited to authority showing that the transfer of their promissory

note into a securities pool discharges that note. Therefore, we hold that the Velascos do not have

superior title, and that the trial court did not err in dismissing their quiet title claim on summary

judgment.


F.      DECLARATORY RELIEF


        The Velascos do not address their claim for declaratory relief in their briefs, aside from

listing it as one of their causes of action. Accordingly, we hold this assignment of error is



       by many district courts. "); see also Kuc v. Bank ofAm., NA, No. CV- 12- 08024 -PCT-
rejected

FJM, 2012 WL 1268126, at * 3 ( D. Ariz. Apr. 16, 2012) ( "[ T] he theory that securitization renders
the Deed of Trust            has been repeatedly rejected. "); White v. IndyMac Bank, FSB,
                       unenforceable

No. 09 -00571 DAE -KSC, 2012 WL 966638, at * 6 ( D. Haw. Mar. 20, 2012) ( " The argument that
parties lose their interest in a loan when it is assigned to a securitization trust or REMIC has been
rejected   by numerous         courts. ");   Washburn v. Bank ofAm., N.A., No. 1: 11 - cv- 00193- EJL -CWD,
2011 WL 7053617,           at *   5 ( D. Idaho Oct. 21, 2011) ( " This is not a new battlefield. Several courts
have rejected various theories that securitization of a loan somehow diminishes the underlying
power of sale that can be exercised upon a trustor' s breach." ( internal quotation marks omitted)).


                                                             22
45642 -7 -II



waived.   RAP 10. 3(   a)(   6); see also State v. Thomas, 150 Wn.2d 821, 874, 83 P. 3d 970 ( 2004)


absent supporting argument or citations to relevant authority, an assignment of error is waived).

        We reverse the trial court' s summary judgment dismissal of the Velascos' CPA claim

against Wells Fargo relating to the loan modification process, but affirm the trial court' s

dismissal of all of the Velascos' remaining claims.

        A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record in accordance with R
                                                                                     . CW


2. 06. 040, it is so ordered.




We concur:




                                                      23
