       IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 NEIL KIKUCHI and MARIE KIKUCHI,                No. 79899-5-I

                             Appellants,        DIVISION ONE

                  v.

 WEINSTEIN & RILEY, P.S.; BANK
 OF NEW YORK MELLON
 CORPORATION fka The Bank of
 New York, as Trustee for the
 Certificateholders of CWALT, Inc.              UNPUBLISHED OPINION
 Alternative Loan Trust 2005-26CB,
 Mortgage Pass-Through Certificates,
 Series 2005-26CB; SHELLPOINT
 MORTGAGE SERVICING; NEW
 PENN FINANCIAL, LLC; BANK OF
 AMERICA, N.A.; and Doe
 Defendants 1 through 20,

                            Respondents.

      BOWMAN, J. — Neil and Marie Kikuchi appeal from the summary judgment

dismissal of their Consumer Protection Act (CPA), chapter 19.86 RCW, lawsuit

arising from a nonjudicial foreclosure proceeding initiated against their home.

They also challenge the basis and reasonableness of the attorney fee award

entered against them. Because the Kikuchis did not meet their burden to show

any genuine issue of material fact and the fee award was proper, we affirm.




     Citations and pin cites are based on the Westlaw online version of the cited material.
No. 79899-5-I/2


                                             FACTS

        Neil Kikuchi bought the property at issue in 1985. On March 9, 2005, the

Kikuchis borrowed $200,000 from Benchmark Lending Group to refinance the

property. They signed a promissory note and deed of trust identifying First

American Title as the trustee, Benchmark as the lender, and Mortgage Electronic

Registration Systems Inc. (MERS) as the beneficiary. The deed of trust

describes MERS as “a separate corporation that is acting solely as a nominee for

Lender and Lender’s successors and assigns.” The note was endorsed to

Countrywide Document Custody Services, then to Countrywide Home Loans

Inc., and then endorsed in blank.

        In May 2005, the loan was sold to the Bank of New York (BONY).1 BONY

was the actual holder of the note.

        In the late 2000s, Neil engaged in criminal conduct involving his employer.

In July 2007, a judge sentenced Neil to serve 17 months in federal prison and

ordered him to pay $845,603.48 in restitution. In 2008, while Neil was

incarcerated, Marie filed for Chapter 7 bankruptcy and was granted a discharge

under 11 U.S.C. § 727. Neil also filed for bankruptcy but the court denied

confirmation of his Chapter 13 plan and dismissed the case.

        On December 12, 2009, the Kikuchis entered into a loan modification with

Bank of America N.A., the loan servicer for BONY. The addendum provided for




        1The entity’s full legal title is “Bank of New York Mellon Corporation fka the Bank of New
York, as Trustee for the Certificateholders of CWALT, Inc. Alternative Loan Trust 2005-26CB,
Mortgage Pass-Through Certificates, Series 2005-26CB.”


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scheduled increases in the interest rate and monthly payments. The Kikuchis

admit that they stopped making payments on the loan in 2011.

       On July 13, 2011, MERS recorded an “Assignment of Deed of Trust,”

assigning its beneficial interest in the deed of trust to BONY. On May 18, 2012,

BONY granted Bank of America a two-year power of attorney for the limited

purpose of taking action on its behalf regarding foreclosure actions. This limited

power of attorney was recorded in King County on April 22, 2013.

       On September 19, 2012, the law firm of Bishop, Marshall & Weibel P.S.

(Bishop) received a foreclosure referral from Bank of America for the Kikuchi

property. The referral indicated that Bishop should bring the foreclosure on

behalf of BONY.

       On November 19, 2012, Bishop issued a “Notice of Default” to the

Kikuchis. Attached to the Notice of Default was a copy of the foreclosure loss

mitigation declaration executed by Bank of America on behalf of BONY.

       On November 28, 2012, BONY executed an “Appointment of Successor

Trustee,” appointing Bishop to serve in that role. An officer of the Bank of

America made the representation under oath.

       On March 5, 2014, BONY granted New Penn Financial LLC dba Shellpoint

Mortgage Servicing (Shellpoint) a two-year limited power of attorney. The limited

power of attorney was recorded in King County on January 5, 2015.

       On November 24, 2014, Bank of America notified the Kikuchis that the

servicing of their loan would transfer to Shellpoint on December 16, 2014. On

April 10, 2015, Shellpoint executed a beneficiary declaration stating that at all




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times on and after May 26, 2005, BONY has been the beneficiary of the deed of

trust and actual holder of the note.

       In May 2015, attorney William Bishop moved from the Bishop law firm to

the law firm of Weinstein & Riley P.S. (Weinstein). He brought the Kikuchi file

with him.

       On December 16, 2015, BONY issued a second two-year limited power of

attorney to Shellpoint. On June 24, 2016, Shellpoint executed an Appointment of

Successor Trustee, appointing Weinstein as successor trustee. On the same

day, Weinstein sent a “Notice of Trustee’s Sale” to the Kikuchis.

       On October 19, 2016, the Kikuchis filed this lawsuit against Weinstein,

BONY, Shellpoint, and Bank of America alleging violation of the CPA and

seeking an injunction and damages. They amended their complaint two days

later, asserting essentially the same claims. On October 26, 2016, the Kikuchis

obtained a temporary restraining order staying the foreclosure sale. The court

granted preliminary injunction on December 16, 2016.

       In 2018, BONY, Shellpoint, and Bank of America jointly moved for

summary judgment and Weinstein separately moved for summary judgment. In

support of summary judgment, the defendants submitted documentary evidence

on the loan as well as the deposition of Neil and declarations from Weinstein,

Shellpoint, and Bank of America. The trial court granted summary judgment

dismissal of the Kikuchis’ claims against all defendants. On March 21, 2019, the

court entered an order and judgment awarding BONY $58,083.82 in attorney




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No. 79899-5-I/5


fees and costs. The court denied the Kikuchis’ motion for reconsideration of the

attorney fee award. The Kikuchis appeal.

                                     ANALYSIS

Summary Judgment

       The Kikuchis contend that genuine issues of material fact preclude

summary judgment because (1) none of the documentation used to support

initiation of the attempted nonjudicial foreclosure was compliant with the deeds of

trust Act (DTA), chapter 61.24 RCW, (2) Bank of America lacked authority to

initiate a nonjudicial foreclosure when it was not the noteholder, and (3) these

errors establish a violation of the CPA.

       This court reviews de novo a trial court’s decision to grant summary

judgment. Lakey v. Puget Sound Energy, Inc., 176 Wn.2d 909, 922, 296 P.3d

860 (2013). A court properly grants a motion for summary judgment when “there

is no genuine issue as to any material fact and . . . the moving party is entitled to

a judgment as a matter of law.” CR 56(c). We view all facts and reasonable

inferences in the light most favorable to the nonmoving party. Wilson v.

Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). The moving party bears

the initial burden of showing the absence of an issue of material fact. Young v.

Key Pharms., Inc., 112 Wn.2d 216, 225, 770 P.2d 182 (1989). “After the moving

party submits adequate affidavits, the nonmoving party must set forth specific

facts which sufficiently rebut the moving party’s contentions and disclose the

existence of a genuine issue as to a material fact.” Meyer v. Univ. of Wash., 105

Wn.2d 847, 852, 719 P.2d 98 (1986). This court may affirm summary judgment




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No. 79899-5-I/6


on any basis supported by the record. C.L. v. Dep’t of Soc. & Health Servs., 200

Wn. App. 189, 198-99, 402 P.3d 346 (2017).

       “Washington does not recognize an independent cause of action under

the DTA seeking monetary damages for alleged DTA violations absent a

completed foreclosure sale.” Frias v. Asset Foreclosure Servs., Inc., 181 Wn.2d

412, 433, 334 P.3d 529 (2014). But a DTA violation may support a claim under

the CPA under certain circumstances, regardless of whether a foreclosure sale

has been completed. Frias, 181 Wn.2d at 433.

       The Kikuchis assert that the assignments of deed of trust were improperly

executed in violation of the DTA and that the identity of the noteholder at all times

in the foreclosure process remains open. We disagree.

       A foreclosure under the DTA generally commences with the issuance of a

notice of default by the beneficiary or trustee at least 30 days prior to the

recording of the notice of trustee’s sale. RCW 61.24.030(8). The DTA defines a

“beneficiary” as “the holder of the instrument or document evidencing the

obligations secured by the deed of trust.” RCW 61.24.005(2). A “holder” is a

“person in possession of a negotiable instrument that is payable either to bearer

or to an identified person that is the person in possession.” RCW 62A.1-

201(b)(21)(A). A holder need not own a note to enforce the note. Brown v. Dep’t

of Commerce, 184 Wn.2d 509, 525, 359 P.3d 771 (2015). Similarly, a loan

“servicer” is not necessarily the owner, but the servicer must be a holder of the

note to enforce it. Brown, 184 Wn.2d at 523.




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No. 79899-5-I/7


       “[T]he holder of a note has the right to appoint a successor trustee under

the Deeds of Trust Act.” Bavand v. OneWest Bank, FSB, 196 Wn. App. 813,

845, 345 P.3d 233 (2016). The beneficiary has the power to appoint any trustee

that is qualified to act as such pursuant to law. RCW 61.24.010(2). Only a

proper beneficiary has the power to appoint a successor to the original trustee

named in the deed of trust, and only a properly appointed trustee may proceed

with a nonjudicial foreclosure of real property. Walker v. Quality Loan Serv.

Corp. of Wash., 176 Wn. App. 294, 306, 308 P.3d 716 (2013). Thus, if an

unlawful beneficiary appoints a successor trustee, that trustee lacks legal

authority to carry out the foreclosure. Walker, 176 Wn. App. at 306.

       “[A] party satisfies the proof of beneficiary provisions [of] RCW

61.24.030(7)(a) and RCW 61.24.163(5)(c) when it submits an undisputed

declaration under penalty of perjury that it is the actual holder of the promissory

note.” Brown, 184 Wn.2d at 547. An agent of the beneficiary may sign the

beneficiary declaration. Terhune v. N. Cascade Tr. Servs., Inc., 9 Wn. App. 2d

708, 725, 446 P.3d 683 (2019), review denied by Terhune v. U.S. Bank Trust,

N.A., 195 Wn.2d 1004, 458 P.3d 782 (2020). Here, evidence in the record

submitted by the defendants in support of their motion for summary judgment

establishes that BONY was the holder of the note. Weinstein as appointed

successor trustee submitted a declaration stating that BONY has been the holder

of the note since May 2005. BONY’s appointed attorney in fact, Shellpoint,

submitted a declaration attesting to BONY’s status as noteholder in 2005.




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No. 79899-5-I/8


      The Kikuchis assert that this evidence was insufficient to prove that BONY

was the noteholder because the note was in the custody of Bank of America, not

BONY, before it was transferred to Shellpoint in March 2015. But Bank of

America’s business records became Shellpoint’s records upon transfer. See

Discover Bank v. Bridges, 154 Wn. App. 722, 726, 226 P.3d 191 (2010). Bank of

America, acting with limited power of attorney, directed the issuance of the

Notice of Default that commenced the foreclosure on behalf of BONY. Bank of

America took no action while servicer to begin the foreclosure. Bishop, acting as

attorneys for BONY, later issued a Notice of Default to the Kikuchis. The

Kikuchis have not shown a violation of the DTA.

      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.

      To succeed on a CPA claim, a plaintiff must establish (1) an unfair
      or deceptive act (2) in trade or commerce (3) that affects the public
      interest, (4) injury to the plaintiff in his or her business or property,
      and (5) a causal link between the unfair or deceptive act
      complained of and the injury suffered.

Trujillo v. Nw. Tr. Servs., Inc., 183 Wn.2d 820, 834-35, 355 P.3d 1100 (2015). A

claimant must establish all five elements to prevail. Indoor Billboard/Wash., Inc.

v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 74, 170 P.3d 10 (2007).

      [A] claim under the Washington CPA may be predicated upon 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). Conduct

is “deceptive” under the CPA if it misleads or misrepresents something of




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No. 79899-5-I/9


material importance. Walker, 176 Wn. App. at 318. The causal link must show

that the alleged injury would not have occurred “but for” the defendant’s unlawful

acts. Indoor Billboard/Wash., 162 Wn.2d at 82. Whether a particular action

gives rise to a CPA violation is a question of law. Panag v. Farmers Ins. Co. of

Wash., 166 Wn.2d 27, 47, 204 P.3d 885 (2009).

        Here, the Kikuchis have not shown that a DTA violation occurred which

would constitute an unfair or deceptive act under the CPA. The evidence

established that BONY was the holder of the note. Moreover, it is undisputed

that the Kikuchis were in default for failing to pay the loan beginning in 2011.

The 2012 Notice of Default named BONY as the noteholder. In November 2014,

Bank of America notified the Kikuchis that Shellpoint was becoming the new loan

servicer. And on June 24, 2016, Shellpoint became BONY’s successor trustee

and a Notice of Trustee’s Sale was recorded identifying BONY as the beneficiary.

Additionally, Neil failed to identify any misrepresentation on which he relied in

defaulting on the loan. Even if the Kikuchis had raised a question of material fact

regarding violation of the DTA, their CPA claim would fail for lack of evidence of

injury and causation. The court did not err in granting summary judgment

dismissal of the CPA lawsuit.2

Attorney Fees

        The Kikuchis challenge the basis and amount of the attorney fee award in

favor of BONY. Whether a party is entitled to attorney fees is an issue of law



        2 The Kikuchis also argue that the trial court erred in providing the Kikuchis 30 days to
cure the judgment prior to enforcement of the order. Because the Kikuchis failed to raise this
issue below, we need not address it. RAP 2.5(a).


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No. 79899-5-I/10


reviewed de novo. Unifund CCR Partners v. Sunde, 163 Wn. App. 473, 484, 260

P.3d 915 (2011). We review whether the amount of fees awarded was

reasonable under an abuse of discretion standard. Ethridge v. Hwang, 105 Wn.

App. 447, 460, 20 P.3d 958 (2001). A trial judge has broad discretion in

determining the reasonableness of an attorney fee award, and to reverse that

award, the opponent must show that the trial court manifestly abused its

discretion. Ethridge, 105 Wn. App. at 460; Scott Fetzer Co. v. Weeks, 122

Wn.2d 141, 147, 859 P.2d 1210 (1993).

       The Kikuchis first assert that the trial court erred in awarding attorney fees

to BONY because Shellpoint, not BONY, was the entity that incurred litigation

expenses. They contend that no authority supports granting an award of fees to

a loan servicer. But the December 16, 2015 power of attorney authorized

Shellpoint to act in BONY’s name in “defense of the Trustee in litigation and to

resolve any litigation where Shellpoint has an obligation to defend the Trustee.”

The note and deed of trust provide that the “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.” BONY, as successor lender and

holder of the note, has a right to recover reasonable attorney fees and costs in

enforcing the terms of the document.

       The Kikuchis’ reliance on Podbielansik v. LPP Mortgage Ltd., 191 Wn.

App. 662, 362 P.3d 1287 (2015), is misplaced. In Podbielansik—a CPA action

against the lender, servicer, and trustee of a loan—this court awarded attorney

fees and costs on appeal to the lender pursuant to the terms of the loan.




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Podbielansik, 191 Wn. App. at 673. In doing so, the court found that “[t]he

request for attorney fees based on the deed is applicable only to LPP, who took

the deed of trust by assignment and acquired all rights and obligations

thereunder.” Podbielansik, 191 Wn. App. at 673. Nothing in Podbielansik

precludes an award of fees to BONY where the invoices were sent to the entity

tasked with litigating the loan on BONY’s behalf.

      The Kikuchis next assert that the trial court

      ignored obviously false time entries, duplicate and triplicate billing,
      billing from lawyers no[t] licensed in Washington, work on behalf of
      the foreclosing trustee and again, [and] no identification of work
      performed on behalf of BONY and/or that it paid for that work.

      In determining reasonable attorney fees, the trial court must first calculate

the “lodestar figure.” Bowers v. Transamerica Title Ins. Co., 100 Wn.2d 581,

597, 675 P.2d 193 (1983). This figure represents the number of hours

reasonably expended (discounting hours spent on unsuccessful claims,

duplicated effort, and otherwise unproductive time), multiplied by the attorney's

reasonable hourly rate. Bowers, 100 Wn.2d at 597. Generally, the trial court

must enter findings of fact and conclusions of law supporting its award of

attorney fees because without such, the reviewing court is unable to determine

whether the exercise of the trial court's discretion was manifestly unreasonable or

based on untenable grounds. Brand v. Dep’t of Labor & Indus., 139 Wn.2d 659,

674, 989 P.2d 1111 (1999).

      Here, the court entered findings and conclusions specifying that after

reviewing the case file and the parties’ arguments, it determined that the fees




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were reasonable:

       BONY’s recoverable fees are reasonable given its attorneys’
       experience and area of practice, the novelty of issues and difficulty
       of questions involved, the skill requisite to perform the legal
       services properly, the fees customarily charged in this locality for
       similar legal services, and the reputation and ability of the lawyer
       performing those services.

The Kikuchis did not identify the time they allege to be false or explain why they

believe the entries are improper. They have not shown that the trial court’s

award was an abuse of discretion.

       The Kikuchis further argue that the trial court erred in entering an award of

attorney fees and costs against them personally because Marie’s 2008

bankruptcy provided a discharge to her personally and to the marital community.

They therefore contend that BONY could obtain a judgment against only Neil’s

separate property. We disagree.

       The Kikuchis rely on In re Castellino Villas, A. K. F. LLC, 836 F.3d 1028

(9th Cir. 2016), in support of their argument. In Castellino Villas, the Ninth Circuit

held that under the “fair contemplation” test, “ ‘a claim arises when a claimant can

fairly or reasonably contemplate the claim’s existence even if a cause of action

has not yet accrued under nonbankruptcy law.’ ” Castellino Villas, 836 F.3d at

1034 (quoting In re SNTL Corp., 571 F.3d 826, 839 (9th Cir. 2009)). The court

then discussed the application of this test in prepetition and postpetition litigation:

       When parties engage in prepetition litigation that could lead to an
       award of attorneys’ fees, they may fairly contemplate that the
       prevailing party will be awarded those fees. Therefore, a creditor’s
       contingent claim to such fees is discharged in bankruptcy, even if
       some fees are incurred post-petition. But when the prepetition
       litigation is resolved in bankruptcy so that any claim (including a
       contingent claim for attorneys’ fees) against the debtor would be



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       discharged, we cannot say that the debtor’s affirmative action to
       commence what amounts to “a whole new course of litigation,”
       Siegel [v. Federal Home Loan Mortgage Corp.], 143 F.3d [525,] 534
       [(9th Cir. 1998)], was in the fair contemplation of the parties when
       the debtor filed a bankruptcy petition. Rather, the debtor’s decision
       to eschew the fresh start provided by bankruptcy and engage in
       new litigation is more akin to post-petition conduct that, by
       definition, was not in the fair contemplation of the parties
       prepetition.

Castellino Villas, 836 F.3d at 1035-36.

       Here, the Kikuchis signed the note and deed of trust in 2005, before

Marie’s 2008 bankruptcy. In 2012, after the debts were discharged, BONY

attempted foreclosure as the holder of the note. The Kikuchis then initiated a

new action challenging the foreclosure and alleging that BONY lacked authority

to enforce the terms of their loan. BONY could not reasonably have anticipated

that the Kikuchis would initiate this litigation. Therefore, under the fair

contemplation test, the attorney fee award is more like a postpetition claim.

Attorney Fees on Appeal

       BONY requests an award of attorney fees and costs on appeal under the

attorney fee provision in the loan documents. When a contract provides for an

attorney fee award, the party prevailing before this court may seek reasonable

attorney fees incurred on appeal. First Citizens Bank & Trust Co. v. Harrison,

181 Wn. App. 595, 607, 326 P.3d 808 (2014); see also RAP 18.1(a). Subject to

compliance with RAP 18.1, we award BONY reasonable attorney fees and costs

on appeal.

       Weinstein requests an award of attorney fees and costs under RAP 18.1,

RAP 18.9(a), CR 11(4), and RCW 4.84.185 for defending a frivolous appeal. An




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appeal is frivolous if it raises no debatable issues on which reasonable minds

might differ and is so devoid of merit that no reasonable possibility of reversal

exists. Carrillo v. City of Ocean Shores, 122 Wn. App. 592, 619, 94 P.3d 961

(2004). We decline to award fees and costs on appeal to Weinstein on this

basis.

         We affirm summary judgment dismissal of the Kikuchi’s CPA lawsuit and

the award of attorney fees.




WE CONCUR:




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