MOTION FOR RECONSIDERATION OF THE COURT’S GRANT OF …

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SUPERIOR COURT OF WASHINGTON IN AND FOR PIERCE COUNTY

SCOTT TOWNSEND and DEBORAH TOWNSEND, husband and wife, Plaintiffs, vs. QUALITY LOAN SERVICE CORP. OF WASHINGTON, a Washington corporation, MCCARTHY & HOLTHUS LLP, a Washington corporation, and NATIONSTAR MORTGAGE, LLC, a Delaware limited liability company, Defendants.

CASE NO: 13-2-14954-6 MOTION FOR RECONSIDERATION OF THE COURT’S GRANT OF SUMMARY JUDGMENT IN FAVOR OF NATIONSTAR

I. RELIEF REQUESTED

COME NOWS, Plaintiffs DEBORAH TOWNSEND and SCOTT TOWNSEND, by

and through the undersigned counsel of record, and move this Court for Reconsideration of

its Grant of Summary Judgment and Dismissal in favor of Defendant Nationstar Mortgage

PLAINTIFFS’ MOTION FOR RECONSIDERATION 1

H A T H U D A O , E S Q .

G r a n d C e n t r a l L a w P L L C

787 Maynard Ave S Seattle, WA 98104 Tel. 727-269-9334 Fax.727-264-2447

E-mail: [email protected]

E-FILEDIN COUNTY CLERK'S OFFICE

PIERCE COUNTY, WASHINGTON

September 15 2014 3:57 PM

KEVIN STOCKCOUNTY CLERK

NO: 13-2-14954-6

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LLC. The instant motion is made pursuant to CR 56, CR 59, and PCLR 7(c) (1). Plaintiff

relies on their Opposition/Response to Motion for Summary Judgment and attachments

thereto, Plaintiff’s Declaration and the Court’s files and records as well as the attached 2012

Amended Complaint in Townsend I, and 2013 First Amended Complaint filed by Plaintiffs

in the instant case.

On September 5, 2014, the Court heard Defendant Nationstar’s Motion for Summary

Judgment and dismissed all claims against Nationstar. The Court’s ruling appears to have

been grounded singularly on the issue of whether Plaintiff’s claims are barred by the doctrine

of res judicata or collateral estoppel by the dismissal of their 2012 lawsuit by the federal

court.

Plaintiff prays the Court, in the interest of justice, to reconsider its prior ruling.

II. LEGAL AUTHORITY & ARGUMENT

The Court appears to have been swayed by the preclusive effect of Judge Leighton’s

dismissal of Townsend I. However, Townsend I was filed in the state court in July of 2012.

The Amended Complaint was not filed in the federal court until October of 2012 (Exhibit 1),

and Judge Leighton’s Order dismissing the same was issued in March of 2013. On the other

hand, this litigation is centered upon Nationstar’s conduct occurring in January of 2013, which

is ongoing based on a series of written communication issued and transmitted by Nationstar to

Plaintiffs that constituted “dual-tracking” or the act of a loan servicer engaging in loan

modification discussion with the borrower while simultaneously escalating to foreclosure

(Exhibit 2). Paragraphs 17 through 24 of the 2013 Amended Complaint itemized Nationstar’s






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Letters to Plaintiffs concerning their Request for Modification Assistance (RMA). These

letters are dated January 25, 2013; March 26, 2013, April 17, 2013, April 18, 2013, July 9,

2013, July 12, 2013, and a telephone conversation occurring on November 8, 2013.1 None of

1“17. While the threatened foreclosure is pending, Plaintiffs have been working with Nationstar Mortgage LLC ("Nationstar"), the servicer of their mortgage loan relentlessly concerning loss mitigation options. In January of 2013, Nationstar wrote to Plaintiff advising: "Nationstar Mortgage would like to inform you of an updated Single Point of Contact (SPOC) to assist you and answer any further questions regarding your loan status or possible assistance." The SPOC identified is Rashad Coleman (Exhibit H, Nationstar Letter 1/25/13). 18. Again, in March of 2013, Nationstar sent another a letter the contents of which are identical to the January letter, except the Single Point of Contact has changed to another person, Andre Lewis (Exhibit I, Nationstar Letter of 3/26/2013). The name of this Single Point of Contact continued to change over the course of 2013. Each time that Plaintiffs contacted Nationstar, they had to tell their story all over again and no one at Nationstar seems to have an understanding of Plaintiffs' loan file. 19. Plaintiffs has engaged in loss mitigation effort in earnest and provided Nationstar with every requested financial information and other personal data. Finally, Nationstar wrote to Plaintiffs in a letter dated April 17, 2013, stating: "Thank You! We have received your documentation for the BoNY Trial Period. Nationstar will now review your information to verify that you are eligible for this program. This review process can take between 20-60 days. " The letter informed Plaintiffs that their "Assigned Foreclosure Prevention Specialist is Sarah Brinsfield." Most importantly, the letter advised: "Please note that during this evaluation period, your home will not be referred to foreclosure or be sold at a foreclosure sale if the foreclosure process has already been initiated." (Exhibit J, Nationstar Letter of 4/17/2013). 20. Nationstar sent Plaintiffs another letter dated the next day, April 18, 2013, advising that it required the Plaintiffs to send in "Most recent quarterly or Year to Date Profit & Loss statement showing gross income EXPENSES and net income IRS W2 or 1099." The same letter contains an incomplete warning in bold lettering: "If you fail to send in these document(s), you will become ineligible for the . [sic]" (Exhibit K, Nationstar Letter 4/18/2013). It has been a pattern of Nationstar to ask Plaintiffs to send financial documents to be sent again and again, and again without any justification. 21. On July 15, 2013, Plaintiffs received a letter from Nationstar which






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these events could have included, and thus were not included in Townsend I, as a matter of

physics. The Court did not consider this salient fact—physical impossibility for Townsend I to

include incidents occurring in 2013—but simply dismissing all claims against Nationstar

informs Plaintiffs that Nationstar Mortgage LLC is the "Beneficiary" and identifies Spencer Martin as "Beneficiary's Authorized Agent" as well as the "Assigned Foreclosure Prevention Specialist." (Exhibit L, Nationstar Letter 07/09/2013). The letter advises Plaintiffs, inter alia, the following options: IMPORTANT RIGHTS FOR HOMEOWNERS You must respond within thirty (30) days of the date of this letter to take advantage of your rights. If YOU DO NOT RESPOND within thirty (30) days, a notice of default may be issued and you may lose your home in foreclosure. (Exhibit L, Nationstar Letter of 7/9/2013)

22. On or about May 21, 2013, Plaintiffs sent out a Qualified Written Request to Nationstar, asking, inter alia, the name of the owner and holder of their promissory note secured by the deed of trust. Nationstar responded with a letter dated July 12, 2013, in which it states that Nationstar "is subservicing the loan on behalf of First Tennessee National Bank, successor to First Horizon Home Loans." in this letter, Nationstar also declares that "Bank of New York Mellon is the current owner of the Note." (Exhibit M, Nationstar Letter 7/12/2013 in response to QWR).

23. On or about November 8, 2013, Sarah Brinsfield, who is identified

as yet another "Assigned Foreclosure Prevention Specialist, contacted Plaintiff Deborah Townsend via telephone to determine whether Plaintiffs are still living in the property. Ms. Brinsfield advised that Plaintiffs could submit yet a whole new package for loan modification to be submitted to underwriter for consideration. According to Ms. Brinsfield, Plaintiffs' submission of a new package for loan modification by the following Tuesday, November 12, 2013, will result in a suspension or continuance of the foreclosure sale date.

24. Plaintiffs have, as always, faithfully filled out the new Request for

Modification Assistance package and submitted it.”






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summarily as a matter of law that they are barred by either res judicata or collateral estoppel.2

PLAINTIFFS’ CLAIMS OF NEGLIGENT MISREPRESENTATION, VIOLATIONS OF THE DTA AND CPA AGAINST NATIONSTAR ARE NOT PRECLUDED BY TOWNSENT I

In Bordeaux v. Ingersoll Rand Co., 71 Wn.2d 392, 395, 429 P.2d 207 (1967), the

Supreme Court discusses by definitions and contrasts the doctrines of res judicata and

collateral estoppel as follows:

Res judicata and collateral estoppel, kindred doctrines designed to prevent relitigation of already determined causes and curtail multiplicity of actions and harassment in the courts, are at times indistinguishable and frequently interchangeable. If the differences must be noted, it could be said that res judicata is the more comprehensive doctrine, identifying a prior judgment arising out of the same cause of action between the same parties, whereas a collateral estoppel relates to and bars relitigation on a particular issue or determinative fact. Both doctrines require a large measure of identity as to parties, issues and facts, and in neither can the party urging the two doctrines as a defense be a stranger to the prior proceeding. He must have been a party, a participant, or in privity with either, and the action out of which the bar is claimed must be qualitatively the same as the case in which the doctrine is set up as a bar. Where res judicata precludes relitigation of an entire cause because of an identity of parties and issues culminating in a judgment, collateral estoppel is less inclusive, preventing retrial of but one or more of the crucial issues or determinative facts.

Id., internal citations omitted.

In Luisi Truck Lines, Inc. v. Washington Util. & Transp. Comm'n, 72 Wn.2d 887, 894,

435 P.2d 654 (1967), the Supreme Court makes clear that: “Neither the doctrine of res judicata

nor collateral estoppel are intended to deny a litigant his day in court. The purpose of both

2 The Court’s Order (Exhibit 3) does not specify whether summary judgment was granted on preclusion as a matter of law, or lack of genuine issue of matter of fact.






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doctrines is only to prevent relitigation of that which has previously been litigated.” The

opinion continues at page 896:

The doctrine of res judicata is based on public policy. Its purpose is to relieve the court from the burden of twice trying the same issue between the same parties. There is nothing, however, in the doctrine or in its historic application which encourages the court to so apply it as to ignore principles of right and justice and the court should be hesitant to so apply the doctrine as to deprive any person of property rights without having his day in court.

Id.

Our case is analogous to Schroeder v. Excelsior Mgmt. Grp. LLC, 177 Wn.App. 94,

where the Supreme Court held that where the subject matter of the 2009 litigation was the

2007 deed of trust, and the subject matter of the 2010 litigation was the foreclosure of the 2009

deed of trust, the doctrine of res judicata did not apply. Here, the subject matter of Townsend

I, as to claims against Nationstar, was all conduct occurring prior to January 2013, whereas the

subject matter of this litigation, is all facts occurring after January 1, 2013, and the Notice of

Trustee Sale recorded by Defendant Quality on May 22, 2013. The Notice of Trustee Sale

recorded by Quality on May 22, 2013, pertains to a new sale, being scheduled for October of

2013, would have been a “future sale” that was not present in Townsend I. Id. (“Further, under

our plain reading of the statute, it is questionable whether the trial court had authority to enter

an order declaring whether the land would be used for agricultural purposes at the time of a

future sale.”)

It would be error for the Court to hold that the dismissal of Townsend I by Judge

Leighton bars all claims relating to a future sale, which this lawsuit is addressing–the last






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Notice of Trustee Sale, recorded in May of 2013– relates to a future sale, in the context of

Townsend I. Given how mortgage loans can be sold several times over their terms, and how

these transfers affect the identity of the beneficiary who can direct the trustee to foreclose upon

the collateral, the timing of the nonjudicial foreclosure is dispositive as to whether it concerns

a sale commenced by one beneficiary that is ongoing, or a sale commenced by another

beneficiary whose rights have just accrued via a recent transfer. In Townsend I, Nationstar was

not identified as a beneficiary. In this lawsuit, Plaintiffs allege that Nationstar made various

representations to them, one of which is Nationstar is the beneficiary under the Deed of Trust

they signed in 2006. Therefore, the Notice of Trustee Sale recorded in May 2013 concerning

the trustee sale scheduled in October of 2013, which is the subject matter of this lawsuit, could

not be barred by the dismissal of Townsend I.

On the issue of collateral estoppel, the Schroeder court held that the doctrine requires:

“(1) identical issues; (2) a final judgment on the merits; (3) the party against whom the plea is

asserted must have been a party to or in privity with a party to the prior adjudication; and (4)

application of the doctrine must not work an injustice on the party against whom the doctrine

is to be applied.” Id. Nationstar has not provided the Court with any analysis on how the actual

facts of Townsend I and this lawsuit would render the doctrine of collateral estoppel

applicable, let alone how in its naked assertion that collateral estoppel should operate. The

doctrine includes the requirement that the party against whom the doctrine is asserted must

have had a full and fair opportunity to litigate the issue in the first forum. Accordingly,

applying collateral estoppel may be improper where the issue is first determined after an






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informal, expedited hearing with relaxed evidentiary standards. State v. Vasquez, 148 Wn.2d

303; 59 P.3d 648 (2002); State v. Williams, 132 Wn.2d 248, 254, 937 P.2d 1052 (1997). Here,

Judge Leighton’s dismissal of Townsend I was based on a procedural fact (that Plaintiffs could

not voluntarily dismiss after a dispositive motion had been filed) and there was no hearing

upon which a full presentation of evidentiary facts could have been made. Clark v. Baines, 150

Wn.2d 905, 913, 84 P.3d 245 (2004).

“If it is doubtful whether a second suit is for the same cause of action as the first, a

proper test is to consider whether the same evidence would sustain both. If the same evidence

would sustain both, the two actions are considered the same; and the judgment in the former is

a bar to the subsequent action although the two actions are different in form. If, however,

different proofs would be required to sustain the two actions, a judgment in the one is no bar to

the other.” Meder v. Ccme Corp., 7 Wn.App. 801, 502 P.2d 1252 (1972); Hayes v. City of

Seattle, 131 Wn.2d 706, 934 P.2d 1179 (1997). “A second test is: ‘was the matter in issue,

adjudicated upon, or necessarily involved in, the determination of the former action? A

judgment in a former action concludes only those matters that were in issue, actually litigated

in, or necessarily involved in, the determination.’” Id.

In the instant case, evidence supporting Plaintiffs’ claims lie within those facts

occurring in 2013. Thus, the evidence differs from those needed to prove the allegations made

in Townsend I. Moreover, Judge Leighton’s dismissal of Townsend I did not rest on any of the

incidents occurring in 2013. Those facts occurring in 2013 were never in issue nor were they






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actually litigated in Townsend I. In summary, the doctrines cannot bar Plaintiffs’ present

claims based on acts taken by Nationstar in 2013:

While it is admitted, there can be but one recovery upon the same cause of action. This does not mean the subject-matter of a cause of action can be litigated but once. It may be litigated as often as an independent cause of action arises which, because of its subsequent creation, could not have been litigated in the former suit, as the right did not then exist. It follows from the very nature of things that a cause of action which did not exist at the time of a former judgment could not have been the subject-matter of the action sustaining that judgment.

Id. at 806, citing to Harsin v. Oman, 68 Wash. 281, 123 Pac. 1., emphasis added.

Plaintiffs will not repeat their arguments and evidence in opposition of summary

judgment on their tort claim for Negligent Representation, and violations of the DTA and CPA

as those have been laid out in their Response and Declaration of Plaintiffs in support of the

same. Plaintiffs wish only to implore the Court to recognize that that the facts alleged by the

Amended Complaint in the instant case could not have been subsumed by the Amended

Complaint in Townsend I. Meder, supra. If Nationstar had not written and called Plaintiffs,

feigning consideration of their loss mitigation application while escalating the foreclosure by

instructing Quality to record the Notice of Trustee Sale on May 22, 2013, Plaintiffs would

have no case whatsoever. Therefore, the Court should reconsider its grant of summary

judgment and allow Plaintiffs’ claims against Nationstar to proceed to trial.






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DATED this 15th day of September, 2014.

/s/ Ha Thu Dao HA THU DAO, WSBN 21793, Counsel for Plaintiffs

DECLARATION OF MAILING

The undersigned certifies that on the below date, she caused to be emailed a copy of

the foregoing Motion for Reconsideration and Exhibits to:

Andrew Yates Lane Powell, PC 1420 Fifth Ave, Ste 4200 Seattle WA 98111-9402 206-223-7110 [email protected]

Attorneys for Defendant Nationstar

Joseph W. McIntosh McCarthy & Holthus, LLP 19735 10th Ave NE Ste N200 Poulsbo, WA 98370-7478 (206) 319-9100 Ext. 2006 [email protected] Attorneys for Defendant Quality Loan Service Corp. of Washington.

DATED this 15th day of September, 2014.

/s/ Ha Thu Dao

_____________________________ Ha Thu Dao






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MOTION FOR RECONSIDERATION OF THE COURT’S GRANT OF …