WA Supreme Court: Homeowner Has CPA Claim for DTA Violations Not Resulting in Foreclosure.
This case answers the question as to what remedies a person may have when trying to hold on to their home in the face of shuffling paperwork between banks. Here, Lyons had alone through Wells Fargo, and eventually declared bankruptcy. While she was in the process of modification of her loan, she received notice of the sale of her house from one servicer. She then confirmed that her modification terms were still in force, but received a second notice of sale from another servicer, when it was transferred again. On top of that, employees of the servicer gave conflicting information as to whether the sale was going forward.
After much back and forth between Lyons’ attorney, as well as the attorney for the servicer, the sale was eventually called off. The question here is what causes of action Lyons can maintain against the company for the hell it put her through. Lyons brought claims under the deed of trust act, chapter 61.24 RCW, the Consumer Protection Act, chapter 19.86 RCW, and for intentional infliction of emotional distress.
The Supreme Court dismissed the claim under the DTA. The court noted that it had recently decided Frias v. Asset Foreclosure Services, Inc., ___ Wn.2d ___, 334 P.3d 529 (2014), and decided that the DTA does not allow a claim for damages unless there is an actual foreclosure.
The court noted that while the claim under the DTA failed due to a lack of foreclosure, the acts prohibited by the DTA could be used as a basis for a CPA claim. Thus, if Lyons was able to prove that the servicer did not act in good faith, which would’ve been a violation of the DTA, it could support a CPA claim. Similarly, the servicer may not have complied with the provision requiring it have proof that Wells Fargo was the holder of the note. “Seeking to foreclose without being a holder of the applicable note in violation of the DTA is actionable in a claim for damages under the CPA.” The declaration by the servicer here was deficient in that it provided ambiguity as to whether the statutory requirements have been met. The court noted a similar federal district court case held that such a declaration did not comply. Finally, the court was rightly confused as to how Wells Fargo could give the beneficial interest to someone else, and then claim eight months later later that it held the beneficial interest.
As to the intentional infliction of emotional distress claim, otherwise known as the tort of outrage, it requires that there be (1) extreme and outrageous conduct, (2) intentional or reckless infliction of emotional distress, and (3) it actually results to plaintiff of severe emotional distress. The court held here that the actions, while they would support a claim under the DTA if there was a foreclosure, and definitely support a claim under the CPA, did not rise to the level of outrageousness required by the law.