Smith v. Fidelity National Title Insurance Company et al

Filing 18

ORDER granting 9 13 Defendants' Motion to Dismiss for Failure to State a Claim;, by Judge Thomas S. Zilly.(MD)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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DAVE F. SMITH,

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Plaintiff,

FIDELITY NATIONAL TITLE
INSURANCE COMPANY, et al.,

ORDER

Defendants.

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C14-173 TSZ

v.

THIS MATTER comes before the Court on a motion to dismiss brought by

14 defendants Ocwen Loan Servicing, LLC (“Ocwen”) and U.S. Bank National Association
15 (“U.S. Bank”), docket no. 9, which is joined by defendant Fidelity National Title
16 Insurance Company (“Fidelity”), docket no. 13. Having reviewed all papers filed in
17 support of, and in opposition to, defendants’ motion, the Court enters the following order.
18 Background
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Plaintiff Dave F. Smith is a junior lien holder as to commercial real property

20 located at 1344 17th Street SE, in Auburn, Washington. Smith Decl. at ¶ 2 (docket
21 no. 14-2); see Exs. 1-3 to Compl. (docket nos. 1-1, 1-2, & 1-3). Defendant U.S. Bank, as
22 trustee for Lehman Brothers Small Balance Commercial Mortgage Pass-Through
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1 Certificates, Series 2006-1, is the successor beneficiary of a senior deed of trust on the
2 same commercial property. Exs. 1 & 2 to Request for Judical Notice (docket no. 10-1).
3 Fidelity is the successor trustee under the senior deed of trust. Id. at Ex. 3. Ocwen acts
4 as servicer for the senior lien holder. See Compl. at ¶ 3.6 (docket no. 1-1).
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On May 31, 2013, Fidelity sent to the grantors of the senior deed of trust a Notice

6 of Foreclosure and a Notice of Trustee’s Sale. See Ex. 1 to Boyd Decl. (docket no. 14-3);
7 Ex. 4 to Request for Judicial Notice (docket no. 10-1). The Notice of Foreclosure
8 indicated that “[n]otice and other process may be served upon the trustee at: Fidelity
9 National Title Insurance Company, c/o Chicago Title Ins. Attn: Trustee Services Dept,
10 701 Fifth Ave, Suite 2300, Seattle, WA 98104” and provided a local telephone number of
11 206-628-5666. Ex. 1 to Boyd Decl. (docket no. 14-3 at 6). On January 23, 2014, one of
12 plaintiff’s attorney’s employees called the local number and spoke with an underwriter at
13 Chicago Title, who stated that legal documents for Fidelity could be served at Chicago
14 Title’s office, and such materials would be forwarded to Fidelity. Boyd Decl. at ¶¶ 2-6.
15 For purposes of this litigation, however, Fidelity was served with the summons and
16 complaint via the Insurance Commissioner. 1 Id. at ¶ 10 & Ex. 4.
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Plaintiff initiated this action in King County Superior Court, alleging two claims,

18 one under Washington’s Deed of Trust Act and the other under Washington’s Consumer
19 Protection Act (“CPA”). See Compl. at § IV & V (docket no. 1-1). The case was
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Under
or alien insurer must appoint the
21 attorneyWashington law, “[e]ach authorized foreign be served, all legal process issuedcommissioner as its
to receive service of, and upon whom must
against it in this
state upon causes of action arising within this state. . . . Service of legal process against the insurer can be

22 had only by service upon the commissioner, except actions upon contractor bonds . . . .” RCW 48.05.200.
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1 removed on the basis of diversity jurisdiction. Notice of Removal at ¶ 3 (docket no. 1).
2 In this litigation, plaintiff essentially seeks to permanently enjoin defendants from non3 judicially foreclosing on the senior deed of trust. See Compl. at ¶ 8.3 (docket no. 1-1 at
4 11). Defendants now move to dismiss plaintiff’s claims.
5 Discussion
6 A.

Conversion to Summary Judgment

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If, in deciding a motion brought under Rule 12(b)(6), the Court considers matters

8 outside the pleadings, 2 the Court must treat the motion as one for summary judgment.
9 Fed. R. Civ. P. 12(d). A party represented by counsel who submits matters outside the
10 pleadings and invites consideration of them in connection with a Rule 12(b)(6) motion
11 has the requisite notice that the Court might use them to decide the motion, requiring that
12 it be transformed into a motion for summary judgment. See Grove v. Mead Sch. Dist.
13 No. 354, 753 F.2d 1528, 1533 (9th Cir. 1985). Plaintiff having proffered, in opposition to
14 defendants’ Rule 12(b)(6) motion, his own declaration, as well as the declaration of his
15 attorney’s employee, the Court is satisfied that plaintiff is “fairly apprised,” id. at 1532,
16 the motion may be converted into one for summary judgment. Summary judgment must
17 be granted if no genuine issue of material fact exists and the moving party is entitled to
18 judgment as a matter of law. Fed. R. Civ. P. 56(a). When the record taken as a whole
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Defendants Ocwen’s and U.S. Bank’s request and supplemental request for judicial notice, docket
nos. 10 and 16, of the documents attached thereto are GRANTED in part and DENIED in part. The Court
21 takes judicial notice of Exhibits 1-4 and 6, which are copies of materials recorded in the King County
Recorder’s Office, see Fed. R. Evid. 201 & 803(14), but declines to consider Exhibit 5, which contains
22 the summons and complaint filed in a different case in King County Superior Court.

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1 could not lead a rational trier of fact to find for the non-moving party, summary judgment
2 is warranted. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
3 B.

Washington Address and Telephone Number

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Under Washington’s Deed of Trust Act, a title insurance company authorized to

5 insure title to real property under Washington law may act as trustee of a deed of trust.
6 RCW 61.24.010(1)(b). Prior to any notice of trustee’s sale and continuing until the date
7 of any such sale, the trustee must maintain a street address in Washington at which
8 personal service of process may be effected, and the trustee must have a physical
9 presence and telephone service at such address. RCW 61.24.030(6). The crux of both of
10 plaintiff’s claims in this case is that Fidelity failed to comply with RCW 61.24.030(6).
11 The undisputed facts, however, indicate to the contrary. Indeed, plaintiff’s counsel’s
12 employee confirms that Fidelity’s agent answered the number provided in the Notice of
13 Foreclosure and was willing to accept service on behalf of Fidelity at the Washington
14 address set forth in the same document. Boyd Decl. at ¶¶ 2 & 6 (docket no. 14-3). 3 The
15 statute does not prohibit a trustee from designating an in-state agent to satisfy the
16 physical presence requirement. See RCW 61.24.030(6); see also Douglas v. ReconTrust
17 Co., N.A., 2012 WL 5470360 at *5 (W.D. Wash. Nov. 9, 2012). Plaintiff cites no
18 authority to support a different interpretation of the statute. The Court therefore HOLDS,
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In response to defendants’ motion to dismiss, plaintiff argues that Fidelity did not maintain a physical
presence and telephone number at the location of the registered agent (CT Corporation System) for
21 Fidelity National Title Company of Washington, Inc. (“FNTCW”). Resp. at 7 (docket no. 14). Fidelity
and FNTCW, however, are not the same entity. According to the Complaint, Fidelity is a foreign
22 business, see Compl. at ¶ 1.2, whereas FNTCW is a Washington corporation, see Ex. 2 to Boyd Decl.

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1 as a matter of law, that no violation of RCW 61.24.030(6) occurred, and defendants are
2 entitled to summary judgment as to plaintiff’s claims under the Deed of Trust Act and the
3 CPA.
4 Conclusion
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For the foregoing reasons, defendants’ motion to dismiss, docket nos. 9 and 13, is

6 treated as a motion for summary judgment, and the motion is GRANTED. Plaintiff’s
7 claims are DISMISSED with prejudice. The Clerk is DIRECTED to enter judgment
8 accordingly, to send a copy of this Order and the Judgment to all counsel of record, and
9 to close this case.
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IT IS SO ORDERED.

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Dated this 30th day of May, 2014.

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A

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Thomas S. Zilly
United States District Judge

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