Brashkis et al v. Hyperion Capital Group, LLC et al
Filing
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ORDER granting 8 Defendant NW Trustee Services' Motion to Dismiss; granting 20 Hyperion Capital Group's Motion to Dismiss; and granting 26 Bank of America, MERS, and Wells Fargo's Motion to Dismiss. All claims in this matter are dismissed. Signed by Judge Ronald B. Leighton.(DN)
HONORABLE RONALD B. LEIGHTON
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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA
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VERA BRASHKIS and DV&I SERVICES,
INC.,
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Plaintiffs,
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No. 3:11-cv-05635 RBL
ORDER GRANTING DEFENDANTS’
MOTIONS TO DISMISS
[Dkt. #s 8, 20, 26]
v.
HYPERION CAPITAL GROUP, LLC;
MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.;
NORTHWEST TRUSTEE SERVICES, INC.;
BANK OF AMERICA, N.A.; WELLS
FARGO BANK, N.A.; and DOES 1–20,
Defendants.
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INTRODUCTION
THIS MATTER comes before the Court upon Defendants’ Motions to Dismiss under
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Rule 12(b)(6) for failure to state a claim upon which relief can be granted. [Dkt. #s 8, 20, 26].
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This case arises from a home mortgage agreement between Plaintiff Vera Brashkis and
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Defendant Hyperion Capital Group, LLC. When Plaintiff defaulted on her mortgage, the
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property at issue was repossessed. Plaintiff asserts a variety of claims against Defendants, all
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based upon her assertion that they acted deceptively and fraudulently throughout the loan
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process.
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The Court has reviewed the materials submitted in support of and in opposition to the
Motions. For the reasons below, the Defendants’ Motions to Dismiss are GRANTED.
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ORDER - 1
BACKGROUND
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1. Brashkis Property
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On October 24, 2006, Plaintiff Vera Brashkis1 executed and delivered a $500,000
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promissory note to Defendant Hyperion Capital Group, LLC. To secure repayment of the Note,
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Brashkis executed and delivered to Hyperion a deed of trust on her Washougal, Washington
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Property. The Deed was recorded on October 31, 2006, and identified Defendant Mortgage
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Electronic Registration Systems, Inc. (MERS) as the nominee and beneficiary. Hyperion
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assigned beneficial interest under the Deed to Defendant Bank of America, N.A. The
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assignment of deed of trust was recorded on April 28, 2008. Bank of America then appointed
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Defendant Northwest Trustee Services, Inc. (NWTS) as successor trustee. The appointment of
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successor trustee was also recorded on April 28, 2008.
Brashkis subsequently failed to make required mortgage payments and defaulted on the
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Note. Bank of America pursued foreclosure under the Deed’s power of sale provision. As
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trustee, NWTS conducted a foreclosure sale on July 15, 2011. There were no bids, and the
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Brashkis Property reverted to beneficiary Bank of America. The Bank received a trustee’s deed,
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which was recorded on July 25, 2011.
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2. Procedural Background
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Plaintiffs filed this suit in Clark County Superior Court on July 22, 2011, against
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Hyperion, MERS, NWTS, Bank of America, Wells Fargo, and twenty unnamed officers.
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Plaintiffs allege that Defendants acted fraudulently and deceptively throughout the mortgage
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process. Defendant Wells Fargo Bank removed the case to Federal Court on federal question
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grounds under 28 U.S.C. § 1446. [Dkt. #1]. Plaintiffs seek money damages as well as
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declaratory and injunctive relief. Plaintiffs claim fraud, unfair business practices under
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Washington’s Consumer Protection Act (RCW 19.86), prohibited practices under the
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Washington’s Escrow Agent Registration Act (RCW 18.44), claims that Defendants aided and
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abetted each other in fraudulent activities, claims quiet title, and slander of title. Defendants
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filed Motions to Dismiss all claims [Dkt. #s 8, 20, 26].
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Brashkis alleges that DV&I Services, also involved in this case as a Plaintiff, is the current lawful owner of the
subject Property pursuant to a quitclaim deed executed by Brashkis.
ORDER - 2
DISCUSSION
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1. Standard for Dismissal
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Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal
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theory or absence of sufficient facts alleged under a cognizable legal theory. Balistreri v.
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Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff’s complaint must allege
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facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 129 S. Ct. 1937,
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1949 (2009). A claim has “facial plausibility” when the party seeking relief “pleads factual
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content that allows the court to draw the reasonable inference that the defendant is liable for the
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misconduct alleged.” Id. Although the Court must accept as true the Complaint’s well-pled facts,
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conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper
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[Rule 12(b)(6)] motion. Vasquez v. L. A. County, 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell
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v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff’s obligation to
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provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions,
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and a formulaic recitation of the elements of a cause of action will not do. Factual allegations
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must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly,
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550 U.S. 544, 555 (2007) (citations and footnote omitted). This requires a plaintiff to plead
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“more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S. Ct. at
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1949 (citing Twombly).
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2. Fraud Claims
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Brashkis claims fraud against all Defendants. She claims Defendants falsely represented
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costs, fees, commissions, and risks associated with the loan. Her fraud claims hinge on
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Hyperion’s and MERS’ alleged failures of duties under the federal Truth in Lending Act (TILA)
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(15 U.S.C. § 1638) and the federal Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. §
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2607).
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Plaintiffs’ TILA and RESPA claims are time-barred. TILA imposes a one-year statute of
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limitations on damages claims. 15 U.S.C. § 1640(e). Plaintiffs alleged violations stem from the
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loan application process. The limitations period begins to run when loan documents are signed.
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ORDER - 3
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See Meyer v. Ameriquest Mortg. Co., 342 F.3d 899, 902 (9th Cir. 2003). Brashkis signed the
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documents in October 2006. The one-year TILA limitations period has elapsed.
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RESPA violations are also subject to limitations periods. An action may be brought
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“within 3 years in the case of a violation of section 2605 of this title and 1 year in the case of a
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violation of section 2607 or 2608 of this title from the date of the occurrence of the violation . . . .”
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12 U.S.C. § 2614. Sections 2605, 2607, and 2608 of the Act are all applicable to the fraud
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allegations here. Any alleged violations necessarily occurred at the time the loan was signed.
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Both the one- and three-year limitations periods have run. The fraud claim is time-barred.
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Defendants Motions to Dismiss Plaintiffs’ fraud claims are GRANTED.
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3. Consumer Protection Act Claim
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Plaintiffs claim Defendants used unfair business practices in violation of Washington’s
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Consumer Protection Act (RCW 19.86). Plaintiffs claim Defendants “rushed” Brashkis through
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the loan and escrow process, made the loan without regard to Brashkis’ ability to meet the loan’s
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terms, and violated TILA and RESPA. This claim is also time-barred. Section 19.86.090
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provides a four-year limitations period from the time the cause of action accrues.
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Brashkis took no action within the limitations period after signing loan documents. The
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limitations period has run. If Brashkis also means to support her claim with the alleged TILA
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and RESPA violations discussed above, those alleged violations are unhelpful, because they are
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independently time-barred. Defendants’ Motions to Dismiss Plaintiff’s CPA claim are
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GRANTED.
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4.
Escrow Agent Restriction Act Claim
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Plaintiffs claim Defendants engaged in prohibited practices in violation of Washington’s
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Escrow Agent Restriction Act (RCW 18.44). Section 18.44.301 identifies prohibited practices
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for “any escrow agent, controlling person, officer, designated escrow officer, independent
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contractor, employee of an escrow business, or other person subject to this chapter.” Prohibited
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practices under the EARA include employing any means to defraud or mislead borrowers,
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engaging in any unfair or deceptive practice toward any person, and obtaining property through
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ORDER - 4
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fraud or misrepresentation. Plaintiffs allege Defendants falsely provided and ratified notarized
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documents, “rushed” Brashkis through the loan process, and violated RESPA.
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Plaintiffs simply fail to allege any fact placing Defendants under the regulatory ambit of
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the EARA. Plaintiffs have not asserted that Defendants are escrow agents or any other of the
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identified persons regulated under the statute. Defendants point out that the state database of
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escrow agents and officers subject to the Act does not include any of their names. This claim is
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improper, because Plaintiffs have not alleged any fact to support the application of this statute to
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Defendants. Defendants’ Motions to Dismiss Plaintiffs’ EARA claim are GRANTED.
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5. Aiding and Abetting Claim
Plaintiffs claim Defendants aided and abetted each other in deceptive and fraudulent acts.
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Washington recognizes a cause of action for aiding and abetting fraud in some circumstances.
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Wash. Constr., Inc. v. Sterling Sav. Bank, 163 Wash. App. 1027, 2011 WL 4043579, at *10 n.8
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(2011) (citing Restatement (Second) of Torts § 876 (1977)). To succeed on an aiding and
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abetting claim, a plaintiff must show that a defendant “knows that the other’s conduct constitutes
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a breach of duty and gives substantial assistance or encouragement to the other.” Restatement
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(Second) of Torts § 876(b). This claim requires a showing of agreement and concerted action
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among Defendants in committing the fraud. See Martin v. Abbott Labs., 102 Wash.2d 581, 597–
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599 (1984).
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The fraud claim underlying this aiding and abetting claim has been dismissed. Supra at
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3–4. The aiding and abetting claim cannot proceed when the fraud claim does not. Furthermore,
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Plaintiffs fail to allege any fact establishing Defendants’ knowledge of and assistance with
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deceptive or fraudulent conduct. Plaintiffs merely allege that Defendants did know and did
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assist. These legal conclusions are not factual allegations and insufficient to state a claim on
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which relief can be granted. Defendants’ Motions to Dismiss Plaintiffs’ aiding and abetting
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claim is GRANTED.
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6. Injunctive Relief Claim
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Plaintiffs seek injunctive relief barring collection of Brashkis’ debt, creation of a lien on
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the Property, and foreclosure of the Property. The collection of debt via foreclosure sale already
ORDER - 5
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occurred in July 2011. Plaintiffs claim for injunctive relief is moot. Defendants’ Motions to
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Dismiss Plaintiffs’ request for injunctive relief are GRANTED.
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7. Loan Rescission
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Defendants ascertain that Plaintiff seeks rescission of her loan agreement under TILA.
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The purpose of TILA rescission is to return parties to the status quo ante. Yamamoto v. Bank of
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N.Y., 329 F.3d 1167, 1171 (9th Cir. 2003). Under TILA, a borrower will return money or
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property following rescission (15 U.S.C. § 1635(b)), but courts have discretion to require tender
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of advanced funds prior to rescission of a loan agreement. See Yamamoto, 329 F.3d at 1170.
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Where a borrower has not alleged an ability to tender such funds, this Court has been unwilling
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to allow TILA rescission to proceed. See, e.g., Moore v. ING Bank, FSB, 2011 WL 1832797, at
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*3 (W.D. Wash. May 13, 2011) (holding a TILA rescission claim barred because of a borrower’s
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failure to allege ability to tender). Brashkis has not alleged an ability to return funds advanced
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on the Note.
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Additionally, the TILA limitations period has run, barring Plaintiff from rescinding the
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loan under that statute. To the extent Brashkis seeks rescission of her loan agreement, her
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request fails, and Defendants Motions to Dismiss any rescission claim are GRANTED.
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8. Declaratory Relief Claim
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Plaintiffs seek declaratory relief. DV&I requests a declaration that it holds clear title to
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the Property, and Brashkis requests a declaration that she does not owe any money pursuant to
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her loan. Plaintiffs also seek a declaration that various documents filed with Clark County are
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invalid. These requests for injunctive relief are thoroughly unsupported by factual allegations.
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DV&I is alleged to hold a quitclaim deed to the Property. A quitclaim deed does not in and of
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itself bestow title. It simply confers on grantee whatever interest grantor has in the Property at
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the time of transfer.
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Plaintiffs have alleged no facts to support DV&I’s assertion that it holds title, since
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Brashkis lost title to the property upon repossession by Bank of America. Brashkis’ request for
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declaratory relief is similarly unsupported by factual allegations, as is the request for a
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ORDER - 6
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declaration of document invalidity. Defendants’ Motions to Dismiss Plaintiffs’ request for
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declaratory relief are GRANTED.
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9. Quiet Title Claim
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Plaintiff DV&I seeks quiet title of the Property. A quiet title action is designed to resolve
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competing claims of ownership or the right of property possession. See Kobza v. Tripp, 106
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Wash. App. 90, 95 (2001). Under RCW 7.28.230(1), deeds of trust and mortgages create only a
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secured lien on real property. They do not convey ownership or a right to possess. None of the
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Defendants except Bank of America have a current claim of ownership. Therefore Defendants,
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other than Bank of America, are not the correct parties to engage in such an action.
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With respect to Bank of America, Plaintiff fails to state a claim. Bank of America holds
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a trustee’s deed to the Property following the foreclosure sale. The Deed of Trust Act provides
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that “after a trustee’s sale, no person shall have any right, by statute or otherwise, to redeem the
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property sold at the trustee’s sale.” RCW 61.24.050. Washington law requires that a trustee’s
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deed be delivered and sale finalized “unless the sale itself was void due to a procedural
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irregularity that defeated the trustee’s authority to sell the property.” Udall v. T.D. Escrow
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Servs., Inc., 159 Wash.2d 903, 911 (2007). No such procedural irregularities are alleged here.
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Plaintiff’s quiet title claim depends upon loan rescission this Court refused to grant.
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Supra at 6. Furthermore, Plaintiff cannot rightly proceed on a quiet title claim when all the bases
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for it have been previously dismissed in this Order. The quiet title claim against Bank of
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America therefore fails. Defendants’ Motions to Dismiss Plaintiff’s quiet title claim are
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GRANTED.
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10. Slander of Title Claim
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Plaintiffs assert a slander of title claim against all Defendants. Slander of title is the
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employment of false words regarding a pending sale of property, published maliciously with the
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purpose of defeating plaintiff’s title. See Rogvig v. Douglas , 123 Wash.2d 854, 859 (1994).
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The slander must result in plaintiff’s financial loss. Id.
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Plaintiffs fail to allege any use of false words by Defendants. Plaintiffs fail to allege any
malicious publication. Plaintiffs fail to allege a pending sale or purchase of property at issue.
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The slander of title claim seems to be based on Plaintiffs’ allegation that Defendants did not
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properly file or record various documents. Defendants’ alleged omission is insufficient to
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support a slander of title claim. Defendants’ Motions to Dismiss Plaintiffs’ slander of title claim
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are GRANTED.
CONCLUSION
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Defendants’ Motions to Dismiss all claims are GRANTED.
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IT IS SO ORDERED.
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Dated this 8th day of December, 2011.
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A
RONALD B. LEIGHTON
UNITED STATES DISTRICT JUDGE
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ORDER - 8
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