[No. 63207-8-I. Division One. August 23, 2010.]
June 3, 2010, Oral Argument Beverly Hogg, pro se. Lucy R. Clifthorne, for appellant. Ronald E. Beard, Andrew G. Yates, and David C. Spellman (of Lane Powell, PC), for respondent Wells Fargo Bank, NA. ¶1 LAU, J. -- Acting under a power of attorney signed by his 93-year-old mother, Dottie Brown, Barry Brown obtained and then misappropriated proceeds from a reverse mortgage on her condominium. Dottie's guardian FACTS AND PROCEDURAL HISTORY ¶2 Viewed in the light most favorable to Dottie, the record reveals the following facts. Barry assumed primary responsibility for Dottie's health care and financial affairs. He testified that sometime in 2003 or 2004, Dottie arranged for them to meet with a "representative of a reverse mortgage company" ¶3 That same day, Wells Fargo sent a letter and a copy of the recently completed reverse mortgage application to Dottie "c/o Mr. Barry Brown" at Barry's home address. ¶4 On February 15, Hogg drove Dottie and Barry to a United Parcel Service (UPS) store where Dottie--then 93 years old--signed two powers of attorney (POA) appointing Barry as her attorney-in-fact. The immediately effective durable general power of attorney (general POA) gave Barry the right to "mortgage . . . lands . . . upon such terms and conditions, and under such covenants as [he] shall think fit" and provided, "This power of attorney shall not be affected by the disability of the principal and shall otherwise become null and void upon death." And the durable power of attorney (durable POA) Because of my training and my understanding of the duties of a notary public, I would not have notarized either of . . . the powers of attorney had the Principal, Ms. Dottie Brown, appeared in any way to be incompetent or otherwise unable to understand the documents she was signing. Two witnesses to Dottie signing the durable POA stated under oath, Principal's Competency. I believe that at the time of the Principal's previously-mentioned signing and request, the Principal was of sound mind and was not acting under duress, menace, fraud, undue influence, or misrepresentation. ¶5 The same day she signed the POAs, Dottie and Barry met with a Federal Way Wells Fargo employee to complete a mandatory "Face to Face Certification" and presentation of identification for the reverse mortgage application. Barry also faxed the general POA to Consumer Counseling Northwest, a HUD ¶6 Two days earlier, on February 22, Dottie suffered a stroke that caused aphasia and neurological disorder. The record shows, and the parties do not dispute, the stroke rendered her mentally incompetent. Three days after the stroke, she was discharged to a long-term care facility. ¶7 Meanwhile, Barry continued to pursue closing the reverse mortgage. He sent Wells Fargo the durable POA to establish his authority to act as Dottie's attorney-in-fact due to her incompetence. On April 1, he also submitted a letter from Dottie's orthopedic surgeon, Dr. Michael Franceschina, to confirm her cerebral vascular stroke and aphasia diagnosis. This letter also described Dottie's "difficulty communicating due to the aphasia." A Wells Fargo mortgage loan processor then sent a fax to Dr. Franceschina's office requesting additional information about Dottie's aphasia diagnosis and mental competency. This is in response to the doctor's letter provided to Wells Fargo Bank, NA by Dr. Michael Franceschina for Dottie Brown. My underwriter has reviewed the letter and has questions. 1) When did Ms. Brown develop Expressive Aphasia? 2) Ms. Brown signed the Power of Attorney February 15, 2006. Please clarify if she was competent at that time to sign a Power of Attorney. We need this information to determine whether or not a Power of Attorney will be needed at the time of signing. But Dr. Franceschina declined to provide the additional information, citing his lack of medical expertise, to express an opinion on Dottie's mental competency. However, a note in Wells Fargo's underwriting file concludes, "Per Ginny Miller--Dr. letter and Definition is enough to verify that borrower is incompetent regardless of time frame." ¶8 At closing on April 25, Barry signed the deeds of trust securing the loan under the durable POA grant of authority. Hogg also attended the closing with Barry. The deed covenant required Dottie to live in the condominium as her primary residence. I/We hereby acknowledge and understand that I am executing this Statement of Occupancy which provides that if my loan application on the above described property is approved, I will occupy the same as my principal residence within sixty (60) days of the loan closing. . . . . I further confirm my understanding and agreement that if I fail to occupy the property as my principal residence as provided above, such failure shall constitute a default under the terms and conditions of my loan, and upon the occurrence of such default, the whole sum of principal and interest shall immediately become due and payable at the option of the holder of my Note. ¶9 After the loan closed, Barry deposited approximately $ 198,000 in loan proceeds into a joint account shared with his mother. He transferred $ 20,000 to Hogg's personal bank account from this account. This lawsuit ensued to recover the proceeds. ¶10 In May 2008, Dottie moved for summary judgment against Barry and Hogg on her conversion and breach of fiduciary duty claims. Hogg successfully cross-moved for summary judgment dismissal, arguing that she had no knowledge that Barry had "interfered" with Dottie's property and that any sums she received were not identifiable. In June, the court denied without prejudice Dottie's summary judgment motion against Barry and granted his third party complaint against Wells Fargo. In October, Dottie amended her complaint to allege misappropriation, conversion, federal reverse mortgage law violations, and unfair or deceptive trade practice claims against Wells Fargo. ¶11 On November 14, Dottie moved for summary judgment against Wells Fargo and Barry, arguing that they converted her assets, Barry breached his fiduciary duties to her, and Wells Fargo violated federal reverse mortgage laws. Wells Fargo cross-moved for summary judgment dismissal against Dottie and Barry. The court (1) granted Wells Fargo's summary judgment dismissal motion against Dottie and Barry, (2) denied Dottie's summary judgment motion against Wells Fargo, and (3) granted Dottie's unopposed summary judgment motion against Barry. On January 7, 2009, the court entered final judgment against Barry for $ 289,571.89, including interest, costs, and statutory fees. ANALYSIS Standard of Review [1, 2] ¶12 When reviewing an order granting summary judgment, we engage in the same inquiry as the trial court, viewing the facts and all reasonable inferences in the light most favorable to the nonmoving party. Jones v. Allstate Ins. Co., 146 Wn.2d 291, 300, 45 P.3d 1068 (2002). Summary judgment is appropriate only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Jones, 146 Wn.2d at 300-01. "A material fact is one upon which the outcome of the litigation depends in whole or in part." Atherton Condo. Apt.-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co., 115 Wn.2d 506, 516, 799 P.2d 250 (1990) (citing Morris v. McNicol, 83 Wn.2d 491, 494, 519 P.2d 7 (1974)). Claims against Wells Fargo ¶13 Dottie's liability claims against Wells Fargo rest on three assertions--(1) Wells Fargo failed to verify that Dottie had received mandatory third party credit counseling under 12 U.S.C. section 1715z-20, (2) Wells Fargo improperly approved the reverse mortgage because Dottie was not living in the encumbered property as required by section 1715z-20, and (3) Wells Fargo's section 1715z-20 violations and its improper reliance on the durable POA constitute CPA violations. 1. Violations of Section 1715z-20 ¶14 We do not address Dottie's section 1715z-20 claims because section 1715z-20 creates no express or implied private right of action for damages. [3-6] ¶15 The reverse mortgage program, section 1715z-20, "was established by Congress in 1988 to enable elderly homeowners to convert equity in their homes into a supplemental income stream." Patriot, Inc. v. U.S. Dep't of Hous. & Urban Dev., 963 F. Supp. 1, 3 (D.D.C. 1997) (citing 12 U.S.C. $ 1715z-20(a)). Nothing in section 1715z-20 expressly creates a private right of action for reverse mortgage holders against their mortgagees for violations of that statute. Accordingly, Dottie must show that section 1715z-20 creates an implied cause of action entitling her to relief. See Birkholm v. Wash. Mut. Bank, FA, 447 F. Supp. 2d 1158, 1162 (W.D. Wash. 2006) (citing Suter v. Artist M., 503 U.S. 347, 363-64, 112 S. Ct. 1360, 118 L. Ed. 2d 1 (1992) (?The burden of demonstrating Congressional intent to create an implied right of action lies with the party asserting an implied right of action."). ¶16 To determine if a statute creates a private right of action, we look to the statutory section for " 'rights-creating' language." ¶17 Section 1715z-20 contains no "rights-creating" language. Dottie alleges Wells Fargo failed to verify that she received third party credit counseling and that she lived in the encumbered property as a primary residence. But the counseling stipulation is a requirement for a mortgage "[t]o be eligible for [mortgage] insurance under this section." (m) Authority to insure home purchase mortgage (1) In general Notwithstanding any other provision of this section, the Secretary may insure, upon application by a mortgagee, a home equity conversion mortgage upon such terms and conditions as the Secretary may prescribe, when the home equity conversion mortgage will be used to purchase a 1- to 4-family dwelling unit, one unit of which the mortgagor will occupy as a primary residence, and to provide for any future payments to the mortgagor, based on available equity, as authorized under subsection (d)(9). 12 U.S.C. $ 1715z-20(m) (emphasis added). And no other section clearly contains private "rights-creating" language. Dottie also cites no statutory language or case law that supports an implied private right of action based on section 1715z-20. 2. Consumer Protection Act [7] ¶18 To prevail in a private action based on a CPA violation, a party must establish five elements: (1) an unfair or deceptive act or practice (2) occurring in trade or commerce, (3) public interest impact, (4) injury to plaintiff's business or property, and (5) causation. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986). A plaintiff must make a prima facie showing of all five elements in order to survive summary judgment. Griffith v. Centex Real Estate Corp., 93 Wn. App. 202, 214, 969 P.2d 486 (1998). Failure to meet one of these elements is fatal to the claim. Hangman Ridge, 105 Wn.2d at 793. [8-11] ¶19 To establish the first element, a plaintiff "need not show that the act in question was intended to deceive, but that the alleged act had the capacity to deceive a substantial portion of the public." ¶20 In Burns v. McClinton, 135 Wn. App. 285, 290-91, 143 P.3d 630 (2006), an investor sued his accountant, McClinton, for unauthorized fee increases, alleging multiple theories, including a CPA claim. We reversed a trial court award of attorney fees, treble damages, and an injunction under the CPA, in part because there was no evidence of the "capacity to deceive a substantial portion of the public" element. We reasoned, [T]he record lacks evidence that any of McClinton's other clients were deceived. The evidence supporting the trial court's assertion that McClinton failed to disclose fee increases to other clients is virtually nonexistent. No testimony or documents identified other specific clients served by McClinton. McClinton, 135 Wn. App. at 305. ¶21 Like McClinton, the record shows no evidence that Wells Fargo relied on questionable POAs or neglected to verify residency and third party credit counseling when dealing with other reverse mortgage applicants. Dottie correctly acknowledges the state of this record--"Although there was no evidence presented as to other consumers injured by the bank's lending practices, the actions at issue are likely to affect or to have affected other consumers in like circumstances." ¶22 Wells Fargo also argues that Dottie cannot establish the public interest impact and causation elements. Because we conclude that Dottie's CPA claim fails on the first element, we need not address the remaining elements. See McClinton, 135 Wn. App. at 306. Conversion Claim against Hogg ¶23 Dottie next argues that the court erred in dismissing her claim for conversion against Hogg because material fact issues exist regarding liability. [12, 13] ¶24 "Conversion" is " 'the act of willfully interfering with any chattel, without lawful justification, whereby any person entitled thereto is deprived of the possession of it.' " Consulting Overseas Mgmt., Ltd. v. Shtikel, 105 Wn. App. 80, 83, 18 P.3d 1144 (2001) (quoting Wash. State Bank v. Medalia Healthcare, LLC, 96 Wn. App. 547, 554, 984 P.2d 1041 (1999)); Davenport v. Wash. Educ. Ass'n, 147 Wn. App. 704, 722, 197 P.3d 686 (2008). "Money may become the subject of conversion, but only if the party charged with conversion wrongfully received the money, or if that party had an obligation to return the money to the party claiming it." Consulting Overseas, 105 Wn. App. at 83. Furthermore, "[t]here is nothing in the nature of money making it an improper subject of [conversion] so long as it is capable of being identified, as when delivered at one time, by one act and in one mass, or when the deposit is special and the identical money is to be kept for the party making the deposit, or when wrongful possession of such property is obtained." Westview Invs., 133 Wn. App. at 852 (alteration in original) (internal quotation marks omitted) (quoting Davin v. Dowling, 146 Wash. 137, 140-41, 262 P. 123 (1927)). [14-16] ¶25 Wrongful intent is not an element of conversion, and good faith is not a defense. Paris Am. Corp. v. McCausland, 52 Wn. App. 434, 443, 759 P.2d 1210 (1988). " 'Therefore, neither good nor bad faith, neither care nor negligence, neither knowledge nor ignorance, are of the gist of the action [in conversion].' " In re Marriage of Langham, 153 Wn.2d 553, 560, 106 P.3d 212 (2005) (alteration in original) (internal quotation marks omitted) (quoting Judkins v. Sadler-MacNeil, 61 Wn.2d 1, 4, 376 P.2d 837 (1962)). [17-19] ¶26 We conclude that Dottie has raised a material fact issue regarding Hogg's liability for conversion. Whether Hogg wrongfully received or retained the $ 20,000 reverse mortgage proceeds is a question of fact. ¶27 Hogg also argued below that "[k]nowledge that there was a previous interference with the property must be present in the converter for liability to attach. Hogg cannot be secondarily liable when she had no knowledge whatsoever about the previous property, which was not identifiable." ¶28 As we concluded above, there are material issues of fact pertaining to Hogg's liability for conversion. But even if we assume, without deciding, "knowledge that there was a previous interference with the property" is required to establish a conversion claim, Hogg's credibility about when and what she knew relating to Barry's misappropriation of Dottie's loan proceeds weighs in favor of denying summary judgment. ¶29 We affirm summary judgment dismissal as to Wells Fargo but reverse summary judgment dismissal as to Hogg and remand for further proceedings consistent with this opinion. BECKER and APPELWICK, JJ., concur.