footnote 11. We have not had occasion to fully analyze whether the nonjudicial foreclosure act, on its face or as applied, violates article I, section 3 of our state constitution’s command that “[n]o person shall be deprived of life, liberty, or property, without due process of law.”
IN THE SUPREME COURT OF THE STATE OF WASHINGTON
DIANNE KLEM, as Administrator of the
Estate of Dorothy Halstien,
Petitioner,
v.
WASHINGTON MUTUAL BANK, a
Washington Corporation,
Defendant,
QUALITY LOAN SERVICE
CORPORATION OF WASHINGTON, a
Washington Corporation; and QUALITY
LOAN SERVICE CORPORATION, a
California Corporation,
Respondents.
CHAMBERS, J. * -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 Services (Quality), 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 $23 5, 000 for the
house. Unfortunately, there was not enough time before the scheduled foreclosure
sale to close the sale with that buyer. In Washington, the trustee has the discretion
to postpone foreclosure sales. This trustee declined to consider exercising that
discretion, and instead deferred the decision to the lender, WaMu. Despite
numerous requests by the guardian, WaMu did not postpone the sale. A jury found
that the trustee was negligent; that the trustee’s acts or practices violated the
Consumer Protection Act (CPA), chapter 19.86 RCW; and that the trustee
breached its contractual obligations. The Court of Appeals reversed all but the
negligence claim. We reverse the Court of Appeals in part and restore the award
based upon the CPA. We award the guardian reasonable attorney fees and remand
to the trial court to order appropriate injunctive relief.
[…]
This notice of sale was one of apparently many foreclosure documents that
were falsely notarized by Quality and its employees around that time. There was
considerable evidence that falsifying notarizations was a common practice, and one
that Quality employees had been trained to do. While Quality employees
steadfastly refused to speculate under oath how or why this practice existed, the
evidence suggests that documents were falsely dated and notarized to expedite
foreclosures and thereby keep their clients, the lenders, beneficiaries, and other
participants in the secondary market for mortgage debt happy with their work. Ott
acknowledged on the stand that if the notice of sale had been correctly dated, the
sale would not have taken place until at least one week later.
[…]
By contrast, Ott, representing Quality as trustee in this case, testified that he
did not take into account whether the house was worth more than the debt when
conducting foreclosures. When asked why, Ott responded, “My job was to process
the foreclosure … according to the state statutes.” VRP (Jan. 19, 2010) at 348.
When pressed, Ott explained that he counted the days, prepared the forms, saw
they were filed, and nothing more. He acknowledged that, prior to 2009, he would
sometimes incorrectly date documents. He testified that he had been trained to do
that. He also testified that Quality, as trustee, would not delay trustee sales without
the lender’s permission. And he testified that he had never actually read
Washington’s deed of trust statutes.5
[…]
We hold that the act of false dating by a notary employee of the trustee in a
nonjudicial foreclosure is an unfair or deceptive act or practice and satisfies the
first three elements under the Washington CPA.
The trustee argues as a matter of law that the falsely notarized documents did not cause harm. The trustee is wrong; a false notarization is a crime and undermines the integrity of our institutions upon which all must rely upon the faithful fulfillment of the notary’s oath.
The trustee argues as a matter of law that the falsely notarized documents
did not cause harm. The trustee is wrong; a false notarization is a crime and
undermines the integrity of our institutions upon which all must rely upon the
faithful fulfillment of the notary’s oath. There remains, however, the factual issue
of whether the false notarization was a cause of plaintiffs damages. That is, of
course, a question for the jury. Wash. State Physicians Ins. Exch. & Ass ‘n v.
Fisons Corp., 122 Wn.2d 299,314,858 P.2d 1054 (1993) (citing Ayers v. Johnson
& Johnson Baby Prods. Co., 117 Wn.2d 747, 753-56, 818 P.2d 1337 (1991)). We
note that the plaintiff submitted evidence that the purpose of predated notarizations
was to expedite the date of sale to please the beneficiary. Given the evidence that
if the documents had been properly dated, the earliest the sale could have taken
place was one week later. The plaintiff also submitted evidence that with one more
week, it was “very possible” Puget Sound Guardians could have closed the sale.
This additional time would also have provided the guardian more time to persuade
WaMu to postpone the sale. But given that the trustee’s failure to fulfill its
fiduciary duty to postpone the sale, there is sufficient evidence to support the juries
CPA violation verdict, and we need not reach whether this deceptive act was a
cause of plaintiffs damages.16
[…]
