The Honorable Richard A. Jones United States District Court Judge
John Knecht, et al v. Fidelity National Title Insurance Company
UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLEMarch 11, 2013
JOHN KNECHT, ET AL., PLAINTIFFS,
v.
FIDELITY NATIONAL TITLE INSURANCE COMPANY, ET AL.,
DEFENDANTS.
"Show me the note" defense resurrected in Washington as federal judge rules DTA requires proof of note owner...."
Defendants complain that courts across the country, including federal courts in Washington, have rejected "show-me-the-note" arguments like Mr. Knecht's.
In the wake of Bain, this court suggests that it is time to retire the reductive "show-me-the-note" meme, at least in cases arising under Washington law.
In Washington, proof that the beneficiary holds the note secured by a deed of trust is a statutory requisite to a trustee's sale. RCW § 61.24.030(7)(a). Bain similarly highlights the need to demonstrate that the beneficiary holds the note. 285 P.3d at 39 (citing RCW § 61.24.030(7)(a)), at 47-48 ("If the original lender had sold the loan, [it] would need to establish ownership of that loan, either by demonstrating that it actually held the promissory note or by documenting the chain of transactions.").
Prior to Bain, many courts (including many in this District) believed that documents MERS executed purporting to assign interests in deeds of trusts or notes were sufficient proof. Since Bain, that conclusion is questionable, at best. To be sure, there is no requirement that a beneficiary or trustee "show the borrower the note." Instead, a trustee must "have proof that the beneficiary is the owner of any promissory note or other obligation secured by the deed of trust." RCW § 61.24.030(7)(a).
Although there are probably many ways to satisfy the statute's proof requirement, the statute itself establishes one way. Id. ("A declaration by the beneficiary made under penalty of perjury stating that the beneficiary is the actual holder of the promissory note . . . shall be sufficient proof as required under this subsection.").
There is no evidence that Fidelity had a declaration that complied with the statute before it recorded notice of any trustee's sale. More to the point, on a motion to dismiss, the court does not consider evidence. It considers the allegations of the complaint and documents subject to judicial notice.
The only "proof" described in the complaint is the Assignment,
which transfers MERS's nonexistent interest in the Knecht deed of trust and note to DB. In light of the problematic Assignment, Mr. Knecht's complaint plausibly alleges that Fidelity lacked proof that DB holds the Knecht note. It thus plausibly alleges that Fidelity had no statutory authority to conduct a trustee's sale.
Source:
http://wa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20130311...
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