Yesterday the Washington State Supreme Court published it's opinion in Frias v. Asset Disclosure Services, Inc.

The court was answering two questions certified by a federal district court regarding whether the plaintiff had alleged a cause of action for violation of the Deed of Trust Act or Consumer Protection Act that could be brought before the trustee's sale. The answers were that an action could not then be brought under the DTA but one could under the CPA.

It was a slim 5-3 majority on the DTA question, but the dissenters on the DTA question agreed with the majority on the CPA question.

The court also proscribed the CPA damages to limit them to losses in "business or property," so most potential plaintiffs won't be able to successfully allege extensive (and expensive) claims for "injuries" like emotional distress. The damages will be things like attorneys fees and other "hard" costs. But the treble damages allowed under the CPA is designed to make smaller claims more worthwhile to bring.

This opinion reduces the uncertainty borrowers have faced trying to make anything out of a mediation certified with a lack of good faith participation on the part of the beneficiary. They now have a Supreme Court-drawn roadmap on how to bring a pre-sale lawsuit alleging CPA violations based on things like a certification of a lack of good faith participation on the part of a beneficiary in a foreclosure mediation.

A practical effect of this opinion could be that mediators may now see borrowers viewing as more favorable their BATNA versus sticking-with a mediation process in which a beneficiary has not been participating in good faith. They've got a CPA lawsuit now along with their action to enjoin the trustee's sale. They may be quicker to encourage mediators to "close and certify" because they have a clearer path for what a pre-sale CPA lawsuit may look like.

Maybe others, especially those involved in the lawsuit or appeal, could chime-in with their own analysis.

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