Opinion
No. 83347-2-I
03-13-2023
21ST MORTGAGE CORPORATION, a Delaware corporation, Respondent, v. Linda C. NICHOLLS, Defendant, Duncan K. Robertson, Appellant, Residential Funding Company, LLC, a limited liability company; Northwest Trustee Services, Inc., a Washington corporation; Mary A. Miller, an Iowa resident; Tyrone Thorogood, a Pennsylvania resident; Does 1-10, Third-Party Defendants, Ocwen Loan Servicing, LLC, a limited liability company, Respondent.
Mary Conception Anderson, Guidance to Justice Law Firm, PLLC, 19125 N Creek Pkwy. Ste. 120, Bothell, WA, 98011-8000, Erin Cheyenne Sperger, Legal Wellspring, PS, 2367 Tacoma Ave. S, Tacoma, WA, 98402-1409, for Appellant. Douglas Charles Stastny, Severson & Werson, 19100 Von Karman Ave. Ste. 700, Irvine, CA, 92612-6578, Eleanor A. Dubay, Tomasi Bragar DuBay, 121 Sw Morrison St. Ste. 1850, Portland, OR, 97204-3120, for Respondents.
Mary Conception Anderson, Guidance to Justice Law Firm, PLLC, 19125 N Creek Pkwy. Ste. 120, Bothell, WA, 98011-8000, Erin Cheyenne Sperger, Legal Wellspring, PS, 2367 Tacoma Ave. S, Tacoma, WA, 98402-1409, for Appellant.
Douglas Charles Stastny, Severson & Werson, 19100 Von Karman Ave. Ste. 700, Irvine, CA, 92612-6578, Eleanor A. Dubay, Tomasi Bragar DuBay, 121 Sw Morrison St. Ste. 1850, Portland, OR, 97204-3120, for Respondents.
OPINION PUBLISHED IN PART
Díaz, J.
¶1 At oral argument, counsel for the appellant, Duncan Robertson, stated, "This is a very, very simple case: whether or not 21st Mortgage held the original promissory note and the allonges at the time the complaint was filed." Wash. Court of Appeals oral argument, Duncan K. Robertson v. Residential Funding Company, LLC., No. 833472 (Jan. 20, 2023), at 46 sec., through 1 min., video recording by TVW, Washington State's Public Affairs Network, https://tvw.org/video/division-1-court-of-appeals-2023011210/. Because there is no authority in support of the claim that a holder of a note must possess the note on (or affix supporting documents to the note by) the date of the filing of a complaint for judicial foreclosure in order to enforce the note, the verdict question so requiring was improper. Robertson's remaining assignments of error and defense to the foreclosure are unavailing. Thus, we remand this matter to the trial court to grant the decree of foreclosure in favor of respondent/cross-appellant 21st Century Mortgage Corp. (21st), which the jury found possessed the original note and allonges.
I. FACTS
For additional detail on the factual background of this long running case, see 21st Mortgage Corp. v. Robertson et al., No. 75262-6-I, slip op. at 2-4, 2017 WL 4883329 (Wash. Ct. App. Oct. 30, 2017) (unpublished), https://www.courts.wa.gov/opinions/pdf/752626.pdf; Ord. Den. Resp't’s Mot. for Recons. & Appellant's Mot. for Partial Recons. & Amending Op., 21st Mortg. Corp. v. Robertson, No. 75262-6-I (Wash. Ct. App. Oct. 30, 2017), https://www.courts.wa.gov/opinions/pdf/752626.pdf; Robertson v. GMAC Mortg. LLC, 982 F. Supp. 2d 1202, 1205 (W.D. Wash. 2013).
¶2 Linda Nicholls inherited the property in question, which is located in South King County (Property). In 1999, she obtained a loan from Old Kent Mortgage Company (dba National Pacific Mortgage) for $100,000 and executed and delivered a promissory note secured by a deed of trust that encumbered the property (Nicholls Loan).
¶3 In 2006, Nicholls borrowed $82,000 from Robertson (Robertson Loan). The Robertson Loan was secured by a deed of trust that acknowledged the Nicholls Loan and named Robertson as the beneficiary (Robertson Deed of Trust). id.
¶4 Shortly thereafter, Nicholls defaulted on the Robertson Loan and Robertson foreclosed on his Deed of Trust. The resulting non-judicial foreclosure sale subsequently occurred on September 26, 2008, where Robertson purchased the property, with the Nicholls Loan still intact.
¶5 During this time, Residential Funding Company, LLC (RFC) acquired the Nicholls Loan from Old Kent. Specifically, Old Kent endorsed the note to RFC. RFC placed the Nicholls Loan in a securitized trust and endorsed the note to Bank One as trustee for that trust. In an undated allonge attached to the note, Bank One as trustee for RFC endorsed the note in blank. In another allonge, the Bank of New York Mellon Trust Company, as trustee for RFC, endorsed the note to RFC. In a third allonge, pursuant to the bankruptcy proceedings described immediately below, RFC endorsed the note in blank and delivered it and its allonges to 21st, which it claims are the originals.
¶6 On May 14, 2012, RFC filed for bankruptcy. RFC liquidated the Nicholls Loan and sold it to Berkshire Hathaway (Berkshire), free and clear of any claims against the prior owners of the Nicholls Loan. Berkshire then deposited the Nichols Loan into the Knoxville 2012 trust and appointed Wilmington Savings Fund Society dba Christiana trust as trustee. Subsequently, Christiana elected 21st as the master servicer of the trust. In 2014, respondent Ocwen Loan Servicing (Ocwen) sent a notice to Nicholls that 21st would service her loan.
¶7 Nicholls had defaulted on the Nicholls Loan long before 21st had become the master servicer. She had made her last payments on July 8, 2009 and August 11, 2009.
B. Procedural History
¶8 On July 24, 2014, 21st filed a complaint for judicial foreclosure against Nicholls and Robertson as co-defendants in King County Superior Court. Nicholls did not answer and was defaulted, while Robertson answered and asserted originally 22 affirmative defenses and 13 counter- or cross-claims against 21st and against others. In summary, Robertson claimed that 21st did not have standing to bring a foreclosure action because it had obtained the note underlying the foreclosure fraudulently, and also brought in Ocwen, which Robertson claimed participated in the fraud.
For the purposes of this opinion, any discussion of the related proceedings in the U.S. District Court case and subsequent 9th Circuit appeal are omitted. See Robertson, 982 F. Supp. 2d 1202 (W.D. Wash. 2013).
¶9 In 2015, both Robertson and 21st brought motions for summary judgment. On March 14, 2016, the superior court judge denied Robertson's motion and granted 21st’s in part: (1) finding Robertson's 2008 trustee sale was invalid, and thus that Robertson was not the owner of the property and 21st was entitled to a decree of foreclosure; (2) striking Robertson's affirmative defenses; and (3) continuing the stay of Robertson's counterclaims and third-party damage claims, still at issue in this appeal, in deference to a related federal proceeding. Importantly, the court did not rule on 21st’s motion to strike the expert testimony still at issue in this appeal. Robertson appealed.
¶10 In 2017, this court issued an opinion affirming in part and reversing in part the summary judgement orders. Robertson, No. 75262-6-I, slip op. at 2. This court concluded that there were two genuine issues of material fact; namely, (a) as to whether the note presented by 21st was the original adjustable rate note on the Nicholls Loan or a copy thereof, and (b) as to whether the allonges were fraudulent, both thereby raising the question of whether 21st was the holder and was entitled to enforce the note. Id. at 4-7. Specifically, the court held that a report and affidavit by James Kelley (Kelley) provided evidence that the note and allonges were copies, stating, "To the extent that that affidavit is an admissible expert opinion, which is a question that is not before us, it creates a genuine issue of fact whether 21st is the holder of the note" and Kelly's testimony that "two of the allonges were made with a printer" created a genuine issue of material fact as to whether they were "fraudulent." Id. at 6-7 & 7-8.
¶11 This court further declined to reach whether Robertson acquired title to the property through the 2008 sale because his ownership status was immaterial to whether 21st was entitled to a decree of foreclosure. Id. at 9.
¶12 Finally, this court affirmed the trial court's decision to strike Robertson's twenty-two affirmative defenses, with the exception of standing, finding that, again if Kelley's affidavit was admissible, then it created "a genuine issue of material fact whether 21st holds the note. If 21st does not hold the note, then it does not have standing to enforce it." Id. at 10 (citing RCW 62A.3-301 ). This court, thus, remanded back to superior court for a new trial regarding "whether the note and its allonges [in 21st’s possession] are original, and thus whether 21st is the holder entitled to enforce the note." Id. at 8. There was no mention of remanding the matter to determine whether 21st possessed the note on a particular date.
¶13 On remand, on July 30, 2020, the trial court granted summary judgment in favor of 21st on ten of the eleven counterclaims brought by Robertson, all but four of which Robertson voluntarily withdrew or failed to defend. 21st moved for reconsideration on Robertson's final counterclaim of outrage, which the court granted.
¶14 Before trial, 21st submitted a motion to exclude two of Robertson's expert witnesses and the trial court held a Frye hearing for one witness (Kelley), but not the other (Marie McDonnell). Robertson offered these witnesses to testify that 21st did not properly obtain an authentic version of the note and, thus Robertson would argue, 21st did not have standing to enforce the note.
¶15 Following the Frye hearing for Kelley, the court, which admitted to "struggl[ing] ... quite a bit" with its decision, granted 21st’s motion to exclude Kelley, finding that, while Kelley's testimony would be "helpful" and he had "10 years experience examining documents" and "has some particularized knowledge," Kelley's "training and his experience do not rise to the level of the Court finding him to be an expert in this area." Further the court found, while "he definitely employed some of the methodologies," the "methodologies that were employed by Dr. Kelley were not those generally accepted in the scientific community." The trial court clarified that, while Kelley employed the correct methodologies ("Yes ... he did this."), Kelly did not employ "the methodologies in a global sense such that [his] conclusions ... are born out of a proper application of the methodologies."
¶16 As to McDonnell, the court denied 21st’s motion to exclude, but did limit, her testimony, in ways both parties now contest. In particular, the court excluded McDonnell's testimony as to the distant history of the various loans and, what 21st claimed, were legal conclusions. Trial commenced in September 2021.
¶17 At the end of the trial, the court gave the jury its instructions and questions on the verdict form, some of which 21st contested. Specifically, the court gave jury instructions nos. 12-15, which related to how a note is transferred and whether a person may enforce the note, including whether a person has standing to bring a foreclosure action, and limiting instructions thereto. And verdict question 3 asked the jury to determine whether the allonges were "affixed to the original Adjustable Rate Note" at the time 21st filed its foreclosure complaint against Robertson.
¶18 On October 5, 2021, the case was submitted to the jury and, the same day, the jury returned—what can only be called a mixed verdict—finding that 21st was in possession of the original note (verdict question 1) and the original allonges (verdict question 2), but that the original allonges were not affixed to the original Note on July 24, 2014, i.e., the date the Complaint was filed (verdict question 3).
¶19 After the trial court issued its final judgment, 21st filed a CR 50 motion for a judgment as a matter of law (JMOL) to strike verdict question 3 and, in the alternative, for a new trial pursuant to CR 59. The court denied 21st’s motions. In the interim, Robertson was declared the prevailing party and filed additional motions to recover fees and costs, and to vacate the trial court's prior orders, all of which the court denied, with the exception of granting Robertson a cost bill of $464.69.
¶20 Robertson and 21st appealed. Robertson requests a new trial because of (a) the total exclusion of Kelley; (b) the limitations the trial court imposed on the testimony of McDonnell, both of whom Robertson claimed would have testified as to how respondents 21st and Ocwen "fabricated a chain of title"; and (c) the pre-trial dismissal of myriad counterclaims against the respondents, as well as other claimed irregularities during and after trial. ¶21 In its cross-appeal, 21st seeks reversal of the orders denying its motion for a JMOL and motion for a new trial because verdict question 3 (and its related jury instructions) had no factual or legal basis for its inclusion. Alternatively, 21st requested a new trial to remedy the partial inclusion of Robertson's second expert witness, and because of other claimed irregularities. We begin our analysis with 21st’s assignments of error.
Despite the fact that Robertson appealed the jury verdict and requested a new trial, counsel for Robertson asked this court at oral argument, surprisingly, to simply affirm the jury verdict. Wash. Court of Appeals oral argument, supra, at 43 sec. through 45 sec. We will disregard that contradictory statement and address the arguments as briefed.
II. ANALYSIS
A. Verdict Question 3 and Standing to Foreclose
1. Judgment as a Matter of Law and Motion for New Trial
¶22 CR 50 motions for JMOL are reviewed in the same manner as the trial court. Johnson v. Liquor & Cannabis Bd., 197 Wash.2d 605, 611, 486 P.3d 125 (2021) (citing Guijosa v. Wal-Mart Stores, Inc., 144 Wash.2d 907, 32 P.3d 250 (2001) ). "Granting a motion for [JMOL] is appropriate when, viewing the evidence most favorable to the nonmoving party, the court can say, as a matter of law, there is no substantial evidence or reasonable inference to sustain a verdict for the nonmoving party." Guijosa, 144 Wash.2d at 915, 32 P.3d 250 (quoting Sing v. John L. Scott, Inc., 134 Wash.2d 24, 29, 948 P.2d 816 (1997) ). "Substantial evidence is said to exist if it is sufficient to persuade a fair-minded, rational person of the truth of the declared premise.’ " Id. (quoting Brown v. Superior Underwriters, 30 Wash. App. 303, 306, 632 P.2d 887 (1980) ). A court "may affirm a trial court's disposition of a motion for summary judgment or judgment as a matter of law on any ground supported by the record." Johnson, 197 Wash.2d at 611, 486 P.3d 125 (quoting Washburn v. City of Federal Way, 178 Wash.2d 732, 753 n.9, 310 P.3d 1275 (2013) ).
¶23 "The grounds for granting a new trial are set forth at CR 59(a)," which states that a new trial can be granted for any or all parties on any or all issues. Aluminum Co. of Am. v. Aetna Cas. & Sur. Co., 140 Wash.2d 517, 537, 998 P.2d 856 (2000) (citing CR 59(a) ). The appeals court will grant a new trial if the trial court abused its discretion. Aluminum Co., 140 Wash.2d at 537, 998 P.2d 856. An abuse of discretion is shown when "such a feeling of prejudice been engendered or located in the minds of the jury as to prevent a litigant from having a fair trial." Id. (citing Moore v. Smith, 89 Wash.2d 932, 942, 578 P.2d 26 (1978) ).
¶24 "A clear misstatement of the law [in a jury instruction] is presumed to be prejudicial." Keller v. City of Spokane, 146 Wash.2d 237, 249-50, 44 P.3d 845 (2002) (citing State v. Wanrow, 88 Wash.2d 221, 239, 559 P.2d 548 (1977) ). The party who submits the presumptively prejudicial instruction must rebut this presumption. Anfinson v. FedEx Ground Package Sys., Inc., 174 Wash.2d 851, 873, 281 P.3d 289 (2012).
2. Relevant Background on the Uniform Commercial Code
¶25 Article 3 of the Uniform Commercial Code (UCC), incorporated into state law at Title 62A RCW, governs who is entitled to enforce a negotiable instrument, which includes a promissory note. Bucci v. Nw. Tr. Servs., Inc., 197 Wash. App. 318, 326, 387 P.3d 1139 (2016) (considering a promissory note as the instrument in question). A negotiable instrument is " ‘an unconditional promise or order to pay a fixed amount of money, with or without interest ....’ " Bucci, 197 Wash. App. at 329, 387 P.3d 1139 (quoting RCW 62A.3-104(a) ). Negotiability exists and is "determined from the face, the four corners, of the instrument at the time it is issued without reference to extrinsic facts." Id. (citing 5A Ronald A. Anderson, Anderson on the Uniform Commercial Code § 3-104:13, at 115 (3d ed. 1994) ).
¶26 " ‘Negotiation’ means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder." RCW 62A.3-201. "An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument." RCW 62A.3-203(a).
¶27 " ‘Indorsement’ means a signature ... that ... is made on an instrument for the purpose of ... negotiating the instrument ..." RCW 62A.3-204. An indorsement can be a special indorsement (i.e., one which identifies a person to whom it makes the instrument payable) or a "blank indorsement" (i.e., one which does not identify such an individual). RCW 62A.3-205(a) - (b). "When indorsed in blank, an instrument becomes payable to the bearer and may be negotiated by transfer of possession alone until specially indorsed." RCW 62A.3-205(b).
¶28 A person or entity entitled to enforce an instrument includes the "holder" of the instrument. RCW 62A.3-301(i) ; RCW 62A.1-201(b)(21)(A) ; Bucci, 197 Wash. App. at 326-27, 387 P.3d 1139. A "holder" of a negotiable instrument is "the person in possession if the instrument is payable to the bearer or ... to an identified person ... [that is] the person in possession." Bain v. Metro. Mortgage Grp., Inc., 175 Wash.2d 83, 104, 285 P.3d 34 (2012) ; RCW 62A.1-201(b)(21)(B).
3. Application of Law to Facts
a. Verdict Question 3 Was Improperly Given on the Law
i. Robertson's first argument pursuant to RCW 62A.1-201
¶29 In his briefing and during oral argument, Robertson argued that 21st did not have legal standing to enforce the note, making four arguments. We address each argument in turn.
¶30 First, Robertson argues that 21st did not have standing to enforce the note when it filed its foreclosure complaint in 2014 because the allonges were allegedly not affixed to the note at that time. In support of this claim, at oral argument, counsel for Robertson directed us to Page 44 of their brief, which cites to RCW 62A.1-201(b)(21)(A). Wash. Court of Appeals oral argument, supra, at 17 min., 50 sec. through 18 min., 32 sec.
¶31 That statute is merely the definition of a "holder." RCW 62A.1-201(b)(21)(A). Robertson cites no statute or other authority holding that a party seeking to enforce a note must have physically or digitally affixed the allonges to the note at the time of foreclosure. More broadly, Robertson cites no statute or other authority that stands for the proposition that a holder of a note must possess the note on the date the holder of the note happens to file their complaint for judicial foreclosure to enforce the note. Indeed, the statutes enumerated above are silent as to when someone attempting to enforce a note must affix or possess a supporting allonge. Where a party fails to provide citation to support a legal argument, we assume counsel, like the court, has found none. State v. Loos, 14 Wash. App. 2d 748, 758, 473 P.3d 1229 (2020) (citing State v. Arredondo, 188 Wash.2d 244, 262, 394 P.3d 348 (2017) ). For this reason alone, Robertson's first argument fails.
¶32 Proceeding nonetheless on the merits, as an initial thought experiment, one could possess the note on the days and years before the filing of the complaint (indeed, when the complaint was drafted), accidentally transfer it on the date of filing, and retrieve the note the next date and maintain it throughout the litigation, including on the date the note is offered and admitted into evidence at trial. Under Robertson's logic, the holder of this note could not enforce the note because it happened not to possess the note on the date a legal document happened to be filed. There is no authority for this proposition. On the contrary, and as discussed more below, the more salient question is whether one possesses the note (and, thus, may enforce the note) at the time of summary adjudication or trial.
¶33 Even reviewing the scant authority that does exist, in the few cases that have considered remotely similar arguments related to when a lender who is attempting to enforce a note must possess or affixed allonges, courts still have focused its attention on who holds the note itself, not when they possessed or affixed the allonges.
¶34 In Marts v. U.S. Bank Nat'l Ass'n, our local U.S. district court held that a plaintiff's allegation that allonges were not affixed to a note were unavailing because the bank was still the unquestioned holder of the note. Marts v. U.S. Bank Nat'l Ass'n, 166 F. Supp. 3d 1204, 1210 (W.D. Wash. 2016), aff'd sub nom. Marts v. U.S. Bank, 714 Fed. Appx. 775 (9th Cir. 2018). There, plaintiff-homeowners brought a Consumer Protection Act claim against a bank attempting to foreclose on a note, alleging it engaged in an unfair and deceptive act by initiating foreclosure before perfecting an interest in the note, "because of some unidentified discrepancy in staple holes," raising the doubt that an allonge was ever affixed to the note. Id. at 1209. As in this matter, plaintiffs did not cite to any authority which "would invalidate the defendants’ security interest on that basis." Id. at 1210. The court held that "evidence of intent to affix the allonge to the note is sufficient to establish a valid endorsement." Id. As here, the court found no issues of disputed material fact about the holder's "intent to affix the Allonge, but rather offer mere conjecture regarding staple holes." Id. In other words, pursuant to RCW 62A.3-301(i), the court focused on the undisputed fact that the bank still held the note and its allonges, plain and simple, and made no inquiry into when the allonges were affixed, where there was no evidence of any intent otherwise.
¶35 In his briefing, Robertson references two cases purporting to discuss, not specifically the timing of affixation or possession, but generally standing in foreclosures, which are distinguishable and actually unhelpful to Robertson.
¶36 In Bavand v. OneWest Bank, this court concluded that borrowers in a nonjudicial foreclosure have standing to challenge the appointment of their mortgage's successor trustee . Bavand v. OneWest Bank, 196 Wash. App. 813, 835, 385 P.3d 233 (2016). This court in that matter did not confront the issue at hand, which is when a holder has standing to enforce a note based on the affixing of an allonge. Unhelpfully for Robertson, this court moreover merely reiterated the holding the holder (OneWest) had standing to enforce a promissory note because it possessed the original note, indorsed in blank. Id. at 843, 385 P.3d 233.
¶37 In his trial brief, Robertson also cites to an unpublished opinion of this court, Beverick v. Landmark Building & Development Inc. Beverick v. Landmark Building & Development Inc., No. 74210-8-I, 2017 WL 2840289 (Wash. Ct. App. Jul. 3, 2017) (unpublished), https://www.courts.wa.gov/opinions/pdf/742108.pdf. In that case, the court concluded that Nationstar Mortgage (a transferee) was the proper holder of the note because it maintained its possession throughout the foreclosure action, and presented the original note at a summary judgment hearing to prove its status. Beverick, No. 74210-8-1, slip op. at 16. The case stands for the proposition that the holder of the instrument may be entitled to enforce an instrument in a judicial foreclosure even if they are not the owner. Id. at 15-16. Further, the court held that, under the UCC, the holder of the note can commence a judicial foreclosure if they possess a negotiable instrument indorsed to the original payee, and maintain possession of the instrument throughout a judicial foreclosure action. Id. at 16 (citing Deutsche Bank Nat'l Tr. Co. v. Slotke, 192 Wash. App. 166, 175, 367 P.3d 600 (2016) ).
¶38 There, the foreclosing party had an original note indorsed in blank that was transferred to another lender, and the transferee bank presented it at a summary judgment hearing. Id. With that, the transferee, Nationstar, showed it was the holder of the instrument, leaving no genuine issue of material fact as to whether they held the note. Id. Far from supporting Robertson's claim, Beverick again reasserts the point that possession at the time of adjudication establishes standing, without any need to determine when allonges were affixed to a note.
¶39 On this point, in Deutsche Bank Nat. Tr. Co. v. Slotke, this court similarly concluded that, procedurally, one way to enforce a note is to present it for inspection at a summary judgment hearing. Slotke, 192 Wash. App. 166, 175-176, 367 P.3d 600 (2016). This court noted that it would express no opinion that presenting an original promissory note at a summary judgment hearing was the only way for a holder to prove its right to enforce a note. Id. The other way for a holder to prove its right to enforce a note is, of course, by presentation of the note at trial. Bucci, 197 Wash. App. at 328, 387 P.3d 1139 (The "[m]ere production of a note establishes prima facie authenticity and is sufficient to make a promissory note admissible.") (citing United States v. Varner, 13 F.3d 1503, 1509 (11th Cir. 1994) ).
¶40 In short, none of the authority Robertson adduced, or this court can locate, concludes that a fact finder must determine when allonges were possessed or affixed to a note to establish standing to enforce the note. We will not create such authority on the facts presented here.
ii. Robertson's second argument pursuant to RCW 62A.3-204
¶41 In his second somewhat similar argument, again from his trial brief, Robertson argues that pursuant to RCW 62A.3-204(a), 21st must show that the allonges were "permanently" affixed to the note at the time of the indorsement in blank (here, by Bank One to RFC), otherwise the transfer was invalid and 21st lacked standing to enforce the note.
¶42 Robertson is attempting to get blood out of a turnip. Properly read, the last line of RCW 62A.3-204(a) simply states that a paper (such as an allonge) that is "affixed to the instrument is part of the instrument," importantly, "[f]or the purpose of determining whether a signature is made on an instrument." RCW 62A.3-204(a). In other words, if you want to know whether a signature (which could or could not constitute an "indorsement") is on an instrument, the UCC states you may consider any documents affixed to an instrument as part of the instrument.
¶43 Two errors follow from his argument. First, simply because something is a signature does not make it an indorsement. As stated in RCW 62A.3-204(a), a signature is an indorsement if it is made on the instrument "for the purpose of (i) negotiating the instrument ..." Id. (emphasis added). So the inquiry to which affixation is relevant is, not standing to enforce, but whether the signature is evidence of negotiability or, more accurately, whether it "unambiguously" somehow shows that negotiability was not the purpose of the signature. Id. Affixation is not required for standing, where that is meant as the right to enforce.
¶44 Second, the right to enforce an instrument, at issue here, is discussed at RCW 62A.3-203, which defines the transfer of an instrument creating a right to enforce. In other words, RCW 62A.3-203 is relevant, RCW 62A.3-204 is not, and there is no reference to affixing in RCW 62A.3-203. Further, RCW 62A.3-205(b) makes clear that, "When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed." RCW 62A.3-205(b). 21st held an indorsement in blank and a note indorsed in blank can be enforced and transferred by the bearer, i.e., the person who possesses it, without reference to affixations. Id.
¶45 Thus, the stray language of affixation at RCW 62A.3-204(a) is irrelevant to issues presented here: the enforceability of a note with an indorsement in blank in the possession of 21st.
iii. Robertson's last arguments pursuant to RCW 62A.3-308 and "public policy"
¶46 Third, at oral argument, Robertson's counsel cited to RCW 62A.3-308, which relates to proof of authenticity, validity or authority to make signatures, in support again of Robertson's claim that 21st was required to possess the note at the time of the filing of its complaint. Wash. Court of Appeals oral argument, supra, at 17 min. 54 sec. through 18 min., 22 sec. However, here, we have an indorsement in blank, which is expressly covered by RCW 62A.3-205 as stated above. Further, RCW 62A.3-308 simply does not state that the holder must hold the note and allonges at time of filing of the complaint. If anything, RCW 62A.3-308 ’s emphasis on proof "at the time of trial" suggests that the proper time to verify the validity of signatures (again, not at issue here) to foreclose is when "proof" is required, which is the date the court considers the merits of the proposed decree of foreclosure. So Robertson's third argument also is insufficient as a matter of law.
Although it may be necessary to prove standing to foreclose at the time of filing a complaint in a non -judicial foreclosure, it is not for a judicial foreclosure (like here). See, e.g., Bavand, 196 Wash. App. at 824, 385 P.3d 233 (plaintiff's "show me the note" argument is simply untenable). Further, unlike in federal court, in state court, standing generally is not pled at the time a complaint is filed. CR 8(a).
¶47 Fourth, and finally, at oral argument, Robertson's counsel contended that "public policy" requires a showing of possession of the note and allonges at the time of the complaint. Wash. Court of Appeals oral argument, supra, at 3 min., 30 sec. through 3 min. 54 sec. Because this was the first time that counsel raised this argument, we will not consider Robertson's final argument. State v. Elliott, 114 Wash.2d 6, 15, 785 P.2d 440 (1990) ("This court will not consider claims insufficiently argued by the parties.") (citing State v. Wethered, 110 Wash.2d 466, 472, 755 P.2d 797 (1988) ).
¶48 Thus, we conclude that there is no authority in support of the affirmative proposition that one must possess the note and allonges, or affix the allonges to the note, at the time of lawsuit happened to be filed, as Robertson urges.
¶49 Moreover, because a misstatement of law is presumptively prejudicial, the party who offered the improper instruction or verdict form must rebut the presumption that prejudice resulted. Anfinson, 174 Wash.2d at 874, 281 P.3d 289. Tellingly, Robertson does not address this question as to whether this is an error of law, rather he attempts to recharacterize 21st’s argument as a "factual argument, not [sic.] legal one." That response is nearly non-responsive and we conclude that Robertson has not met his burden to show that 21st was not prejudiced by the inclusion of verdict question 3 and its related jury instructions.
b. Verdict Question 3 Was Improperly Given on the Facts
¶50 Even if Robertson's views were the law, 21st also argues that "the only relevant and admissible testimony presented at trial shows that 21st was in possession of the original Note and Allonges at the time the Complaint was filed," on that July date in 2014. 21st is correct. Robertson's witnesses confirmed that they did not have any personal knowledge of whether and when 21st was in possession of the note and allonges.
¶51 In response, Robertson baldly claims that "the jury found in favor of [him] because it did not find [Warkins] credible." He does not point to anything in the record , whether testimony or evidentiary, to provide an evidentiary basis upon which the jury could find Warkins not credible, other than one email in which a lawyer asks another lawyer to provide a copy of the note. It is not a reasonable inference to conclude that this email provides evidence 21st did not possess the note on a very specific day (of filing). Cf. Bucci, 197 Wash. App. at 328, 387 P.3d 1139 ("USB produced the original note, indorsed in blank, for inspection by the trial court. This was sufficient to prove the status of USB as the holder of Bucci's note."). Thus, even considering the evidence in the light most favorable to the moving party, none of Robertson's witnesses provided any evidence to contradict Warkins's testimony.
¶52 Therefore, based on the available facts and authority, verdict question 3 was improperly presented to the jury because there was no factual support for the basis of that verdict. Stated otherwise, whether 21st possessed the note and allonges (affixed or not) at the time of the complaint or indorsement does not affect the outcome of the foreclosure as a question of law or fact. Because this verdict question fails as a matter of law and fact, the trial court erred in denying 21st’s motion for a JMOL. We reverse the denial of 21st’s JMOL, and thus, do not consider or examine 21st’s request, in the alternative, for a new trial.
¶53 A majority of the panel having determined that only the foregoing portion of this opinion will be printed in the Washington Appellate Reports and that the remainder shall be filed for public record pursuant to RCW 2.06.040, it is so ordered.
WE CONCUR:
Andrus, C.J.
Dwyer, J.