Klem v. Wash. Mut. Bank - 176 Wash. 2d 771, 295 P.3d 1179 (2013)

Rule:

To prevail on a Washington Consumer Protection Act, Wash. Rev. Code ch. 19.86, action, a 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.

Facts:

Dorothy Halstien, an aging woman suffering from dementia, owned a home worth somewhere between $ 235,000 and $ 320,000. At about the time she developed dementia, she owed approximately $ 75,000 to Washington Mutual Bank (WaMu), secured by a deed of trust on her home. Because of the cost of her care, her guardian did not have the funds to pay her mortgage and Quality Loan Service Corporation, acting as the trustee of the deed of trust, foreclosed on her home. On the first day it could, Quality sold her home for $ 83,087.67, one dollar more than she owed, including fees and costs. A notary, employed by Quality, had falsely notarized the notice of sale by predating the notary acknowledgment. This falsification permitted the sale to take place earlier than it could have had the notice of sale been dated when it was actually signed. Before the foreclosure sale, Halstien's court appointed guardian secured a signed purchase and sale agreement from a buyer willing to pay $ 235,000 for the house. The trustee declined to consider the discretion to postpone foreclosure sales, and instead, deferred the decision to the lender WaMu. Despite numerous requests by the guardian, WaMu did not postpone the sale. The guardian instituted an action against the trustee and the lender, seeking damages based on negligence, breach of contract, and violation of the Consumer Protection Act for the trustee's failure to postpone the nonjudicial foreclosure sale. The jury found for the guardian. The Washington Court of Appeals concluded that the negligence verdict was sustainable, but that the evidence was insufficient to uphold the breach of contract and CPA claims. The guardian petitioned for review.

Issue:

Under the circumstances, was the evidence insufficient to uphold the guardian’s CPA claims?

Answer:

No.

Conclusion:

The court held that the practice of a trustee in a nonjudicial foreclosure deferring to the lender on whether to postpone a foreclosure sale and thereby failing to exercise its independent discretion as an impartial third party with duties to both parties was an unfair or deceptive act or practice and satisfied the first element of the CPA under Wash. Rev. Code § 61.24.135. The trustee failed to act in good faith to exercise its fiduciary duty to both sides and merely honored an agency relationship with the lender. Further, given the trustee's failure to fulfill its fiduciary duty to postpone the sale, there was sufficient evidence to support the juries CPA violation verdict, and a decision about whether the deceptive act of predating notarizations was a cause of the guardian's damages did not need to be reached.