Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—W.D. Wash.: Debtor in foreclosure may not maintain CPA action for trustee’s misidentification of beneficiary, (Oct 16, 2013)

By Edward L. Puzzo, J.D.

A mortgage loan debtor could not maintain a claim under the Washington Consumer Protection Act, on the basis of the loan trustee’s misrepresentation of the identity of the loan beneficiary at the initiation of foreclosure proceedings, without proof of injury and causation, the federal district court in Seattle has ruled (Massey v. BAC Home Loans Servicing, October 15, 2013, Robart, J.).

Cindy Massey alleged that Northwest Trustee Services’ conduct in nonjudicial foreclosure proceedings violated the Washington Consumer Protection Act (CPA). Massey had previously obtained a loan to finance a real estate purchase. After the execution of the Deed of Trust, various assignments were made, resulting in Northwest Trustee being trustee, and BAC Home Loan Servicing being the lender and beneficiary. Subsequently, Massey defaulted on her loan and Northwest issued a notice of trustee’s sale.

A claim under the CPA, the court explained, requires a deceptive act or practice occurring in commerce, public interest impact, injury to plaintiff’s business or property, and causation.

Deceptive Act or Practice. In Northwest Trustee’s notice of trustee’s sale, Mortgage Electronic Registration Systems (MERS), the original beneficiary on the Deed of Trust prior to assignment to BAC Home Loan Servicing, was listed as beneficiary. Citing the 2012 Washington case of Bain v. Metropolitan Mortgage Group, 285 P. 3d 34, the court ruled that a trustee’s misrepresentation of MER’s status as beneficiary fulfills the deceptive act or practice element of a CPA claim.

Public Interest Impact. Again citing Bain, the court ruled that the public interest element was met, “given the enormous amount of mortgages MERS is involved with in Washington State,” and the similarly substantial role Northwest Trustee had in the state.

Injury and causation. Ms. Massey stated that she suffered embarrassment and humiliation when Northwest Trustee posted the Notice of Sale. In response, the court stated that personal injuries such as mental distress, embarrassment, or inconvenience are not recoverable under the CPA. She further alleged that, in connection with this loan and the default, she had been required to expend time and effort on calls, office visits, attorney consultations, an audit of her loan documents, and had experienced financial difficulties. However, the court noted, she had been unable to articulate how Northwest Trustee’s designation of MERS as beneficiary had been responsible for her financial difficulties or any other cognizable injury. Since Massey could not substantiate the injury and causation elements of her CPA claim, Northwest Trustee’s motion to dismiss must be granted, the court ruled.

The case is No. C12-1314JLR.

Attorneys: Craig R Elkins (Magnum Law Group PLLC) for Cindy T. Massey. Jody M. McCormick (Witherspoon Kelley) for BAC Home Loans Servicing LP. Robert W. Norman, Jr. (Houser & Allison APC) for Mortgage Electronic Registration Service Incorporated.

Companies: BAC Home Loans Servicing LP; Mortgage Electronic Registration Service Incorporated

Cases: StateUnfairTradePractices WashingtonNews