Jessica M. Karmasek Mar. 4, 2013, 5:30pm

OLYMPIA, Wash. (Legal Newsline) -- The Washington Supreme Court ruled last week that a major foreclosure trustee company broke consumer law, saying it is "not merely an agent" for lenders.

In the case at issue, Dorothy Halstien, an aging woman suffering from dementia, owned a home worth between $235,000 and $320,000.

About the time she developed dementia, she owed close to $75,000 to Washington Mutual Bank, or WaMu, secured by a deed of trust on her home.

Because of the cost of her care, her guardian did not have the funds to pay her mortgage. California-based Quality Loan Services, acting as the trustee of the deed of trust, foreclosed on her home.

On the first day it could, Quality sold her home for $83,087.67 -- one dollar more than she owed, including fees and costs.

A notary, employed by Quality, had falsely notarized the notice of sale by predating the notary acknowledgment. This falsification permitted the sale to take place earlier than it could have had the notice of sale been dated when it was actually signed.

Before the foreclosure sale, Halstien's court-appointed guardian secured a signed purchase and sale agreement from a buyer willing to pay $235,000 for the house. Unfortunately, there was not enough time before the scheduled foreclosure sale to close the sale with that buyer.

In Washington, the trustee has the discretion to postpone foreclosure sales.

The trustee in this case -- Quality -- declined to consider exercising that discretion, and instead deferred the decision to the lender, WaMu.

Despite numerous requests by the guardian, WaMu did not postpone the sale.

A jury later found that the trustee was negligent; that its acts or practices violated the state's Consumer Protection Act; and that the trustee breached its contractual obligations.

The state Court of Appeals reversed all but the negligence claim.

The state's high court, in its 29-page opinion filed Thursday, reversed the Court of Appeals in part and restored the award based upon the CPA.

It also awarded the guardian reasonable attorney fees and remanded the case to the trial court to order "appropriate injunctive relief."

The Court held that the right to enjoin a foreclosure sale is an equitable remedy and the failure to enjoin a sale "does not operate to waive claims based on the foreclosure process where it would be inequitable to do so."

"Where applicable, waiver only applies to actions to vacate the sale and not to damages actions," wrote Justice Tom Chambers, who is serving as a justice pro tempore of the Court.

"We hold that it is an unfair or deceptive act or practice under the CPA for a trustee of a nonjudicial foreclosure to fail to exercise its authority to decide whether to delay a sale."

The Court also held that the practice of falsely notarizing a notice of sale is an "unfair or deceptive practice" under the CPA.

From Legal Newsline: Reach Jessica Karmasek by email at

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