Marquez Vargas v. RRA CP Opportunity Tr. 1

FILE                                                           THIS OPINION WAS FILED
                                                                             FOR RECORD AT 8 A.M. ON
        IN CLERK’S OFFICE                                                          APRIL 30, 2026
SUPREME COURT, STATE OF WASHINGTON
         APRIL 30, 2026
                                                                              SARAH R. PENDLETON
                                                                             SUPREME COURT CLERK




         IN THE SUPREME COURT OF THE STATE OF WASHINGTON

        CERTIFICATION FROM THE UNITED                             No. 103735-0
        STATES DISTRICT COURT FOR THE
        WESTERN DISTRICT OF WASHINGTON                            EN BANC
                        IN
                                                                  Filed: April 30, 2026
        GABRIEL MARQUEZ VARGAS,

                            Plaintiff,

                     v.

        RRA CP OPPORTUNITY TRUST 1, REAL
        TIME RESOLUTIONS, INC., and NORTH
        STAR TRUSTEE, LLC,

                            Defendants.


             GORDON MCCLOUD, J.—When a homeowner defaults on a home

       loan secured by a deed of trust, the lender (or a proper successor) can

       sometimes foreclose on and sell the property in a trustee’s sale without judicial

       or court involvement. That carries some risks for the homeowner.

             To protect against those risks, Washington’s deed of trust act (DTA)

       requires that prior to initiating a nonjudicial foreclosure and trustee’s sale, the

       trustee must “have proof that the beneficiary [the party seeking to foreclose]
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

is the holder of any promissory note or other obligation secured by the deed

of trust.” RCW 61.24.030(7)(a) (emphasis added). A sworn declaration by the

beneficiary “stating that the beneficiary is the holder of any promissory note

or other obligation secured by the deed of trust” constitutes sufficient proof.

Id. (emphasis added).

      Plaintiff Gabriel Marquez Vargas bought a home and executed a home

equity line of credit (HELOC) agreement secured by a deed of trust on that

home. He defaulted, and alleged beneficiary, defendant RRA CP Opportunity

Trust 1 (RRA), directed the trustee, defendant North Star Trustee LLC (NST),

to initiate nonjudicial foreclosure proceedings. Defendant Real Time

Resolutions Inc. (RTR), the loan servicer, executed a beneficiary declaration

on behalf of RRA, saying just what the statute permits an alleged beneficiary

to say to avoid judicial foreclosure: that RRA was the “holder” of Marquez

Vargas’ HELOC agreement.

      But that declaration works only if RRA can be the “holder”—a

technical term—of the type of loan agreement—a HELOC—at issue here.

Under Washington’s DTA, RRA can certainly be the holder of a “negotiable

instrument.” But Marquez Vargas argues that one cannot be the holder of a

nonnegotiable instrument and that the HELOC agreement at issue here,



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though masquerading as a typical mortgage, is really just a revolving line of

credit that is, by definition, nonnegotiable.

      Marquez Vargas filed suit in federal court to block the sale. The federal

court knew that he was raising questions of state law that this court—the

state’s highest court—had not yet decided. The federal court therefore

certified the questions to us to answer. We accepted the certification. Our

answer is that we agree with Marquez Vargas on both points.

      First, the HELOC agreement is nonnegotiable. To be “negotiable,” an

instrument must contain an “unconditional promise or order to pay a fixed

amount of money, with or without interest or other charges described in the

promise or order.” RCW 62A.3-104(a). The HELOC agreement at issue here

provides that the borrower may request loans up to a stated credit limit—but

it does not state the amount actually advanced to the borrower. Marquez

Vargas’ HELOC agreement—like all HELOCs and revolving lines of credit

of this sort—therefore flunks the negotiability test. It is not a negotiable

instrument.

      Second, under Washington’s DTA, RRA cannot be the “holder” of a

nonnegotiable instrument. The plain language of the relevant statutes, in

context, combined with our prior case law interpreting that language, compel



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the conclusion that “holder” in this context means the holder of a negotiable

instrument as defined in the UCC.1

        Because the HELOC agreement is not a negotiable instrument, alleged

beneficiary RRA cannot be its “holder.” Thus, RRA cannot proceed with

nonjudicial foreclosure and sale because it cannot truthfully prove what RCW

61.24.030(7)(a) requires an alleged beneficiary who seeks nonjudicial

foreclosure to prove: that it is the “holder” of the HELOC agreement that is

secured by the deed of trust upon which it seeks to foreclose.

        This conclusion does not deprive RRA of other, judicial, remedies.

                 BACKGROUND, FACTS, AND PROCEDURAL HISTORY

   I.        Background on the DTA

        The legislature enacted the DTA in 1965. The statutory deed of trust is

a type of mortgage. Bain v. Metro. Mortg. Grp., Inc., 175 Wn.2d 83, 92-93,

285 P.3d 34 (2012) (quoting 18 WILLIAM B. STOEBUCK & JOHN W. WEAVER,

WASHINGTON PRACTICE: REAL ESTATE: TRANSACTIONS § 17.3, at 260 (2d ed.

2004)). “‘More precisely, it is a three-party transaction in which land is

conveyed by a borrower, the “grantor,” to a “trustee,” who holds title in trust

for a lender, the “beneficiary,” as security for credit or a loan the lender has



        1
            Uniform Commercial Code, ch. 62A RCW.
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Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

given the borrower.’” Id. (quoting 18 STOEBUCK & WEAVER, supra, § 17.3, at

260).

        The DTA defines “beneficiary” as “the holder of the instrument or

document evidencing the obligations secured by the deed of trust, excluding

persons holding the same as security for a different obligation.” RCW

61.24.005(2). “Traditionally, the ‘beneficiary’ of a deed of trust is the lender

who has loaned money to the homeowner.” Bain, 175 Wn.2d at 88. “Lenders,

of course, have long been free to sell that secured debt, typically by selling

the promissory note signed by the homeowner.” Id. By using the “broad[]”

term “beneficiary,” rather than “lender,” the DTA “recognizes that the

beneficiary of a deed of trust at any one time might not be the original lender.”

Id.

        “[T]he key feature of the deed of trust statute is that a deed of trust may

be foreclosed nonjudicially by trustee’s sale,” whereas a traditional mortgage

can be foreclosed only judicially. 18 STOEBUCK & WEAVER, supra, § 20.1, at

114 (Supp. 2025). If the deed of trust grants the trustee the power of sale and

the borrower defaults, the beneficiary may direct the trustee to foreclose the

deed of trust and sell the property in a trustee’s sale. Bain, 175 Wn.2d at 93;

RCW 61.24.020. But the DTA imposes many procedural prerequisites to such

a trustee’s sale. One of those prerequisites is at issue in this case: the

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requirement that “before the notice of trustee’s sale is recorded, transmitted,

or served, the trustee shall have proof that the beneficiary is the holder of any

promissory note or other obligation secured by the deed of trust.” RCW

61.24.030(7)(a). A sworn declaration by the alleged beneficiary that it is the

holder of the note or other obligation is sufficient proof. Id.

         In enacting RCW 61.24.030(7)(a), “[t]he legislature’s clear purpose

was to ensure the party with the authority to enforce and modify the note is

the party engaging in mediation and foreclosure.” Brown v. Dep’t of

Commerce, 184 Wn.2d 509, 543, 359 P.3d 771 (2015). This provision reflects

the axiom of mortgage law that the “‘obligation and mortgage cannot be split,

meaning that the person who can foreclose the mortgage must be the one to

whom the obligation is due.’” Bain, 175 Wn.2d at 97 (quoting 18 STOEBUCK

& WEAVER, supra, § 18.18, at 334).

   II.       Background on negotiable instruments and the UCC

         A negotiable instrument (or note)2 is a type of contract to pay money

that meets specific formal requirements. In essence, a negotiable note is a

contract that states its essential terms on its face, such that “a buyer of the note



       This opinion uses the term “instrument” interchangeably with the term
         2

“note” or “mortgage note,” modifying the term with “negotiable” or
“nonnegotiable” as appropriate.
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can rely on its enforcement without resort to additional documentation.”

HSBC Bank USA, N.A. v. Thomas, 46 Misc. 3d 429, 433, 999 N.Y.S.2d 671

(Sup. Ct. 2014).

      Negotiable notes possess key features that make them very useful in

commerce. First, the right to enforce (collect payment on) a negotiable note is

transferred by physical delivery of the note, 3 and second, if the transferee

takes the note in good faith and for value, without notice of defenses that the

maker of the note might have, the transferee is considered a “holder in due

course” and obtains immunity from certain defenses that the maker could

otherwise raise. Dale A. Whitman, Transferring Nonnegotiable Mortgage

Notes, 11 FLA. A&M U. L. REV. 63, 65 (2015).

       “Until 1861, there was no government-issued paper money to serve as

legal tender, and notes issued by private banks were the primary medium of

exchange” in the United States. Id. The two key characteristics of negotiability

mentioned above were “indispensable to the use of private bank notes as

currency.” Id. Transferability by delivery meant that no separate transaction

was necessary to transfer rights in the note; “it could simply be handed over.”

Id. And immunity from the maker’s defenses “meant that one who accepted a


       3
        The term “negotiable” refers to this characteristic of being transferable by
physical delivery alone. See RCW 62A.3-201.
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Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

bank note as currency did not need to worry about whether some defect in the

process by which the note was issued would permit the bank to refuse to honor

it.” Id.

       The original formal requirements to qualify as a negotiable instrument

were strict. In a widely quoted 1846 case, Judge Gibson described a negotiable

instrument as a “courier without luggage,” meaning that it must be “framed in

the fewest possible words, and those importing the most certain and precise

contract,” and free from any extraneous promises or conditions beyond the

payment of a sum certain in money to a payee or to bearer at a determinable

future time. Overton v. Tyler, 3 Pa. 346, 347 (1846).

       Over time, the requirements for negotiability have been relaxed.

Professor Whitman explains that this change was in large part the result of

changes in the focus of bank lending as federally issued currency replaced the

use of private bank notes:

       When bank notes were used as currency, banks were the makers
       of notes and consumers were the holders. In consumer lending
       transactions, these roles were reversed: consumers were the
       makers, and banks the holders of the notes. This gave banks an
       incentive to use their political power to broaden the definition of
       negotiability and increase their rights as holders.


Whitman, supra, at 66. Thus, over the course of the last 150 years, the scope

of negotiability has broadened. The uniform negotiable instruments act, and
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later its replacement, article 3 of the UCC, gradually increased the types of

extraneous promises and conditions that a note could contain and still be

negotiable. But even if the “courier without luggage” metaphor no longer

works, an instrument must still meet specific formal requirements to qualify

as negotiable.

      Those requirements are now contained in article 3 of the UCC, which

Washington adopted in 1965. Currently, article 3 provides that “negotiable

instrument” means

      [a]n unconditional promise or order to pay a fixed amount of
      money, with or without interest or other charges described in the
      promise or order, if it:

          (1) Is payable to bearer or to order at the time it is issued or
      first comes into possession of a holder;

         (2) Is payable on demand or at a definite time; and

          (3) Does not state any other undertaking or instruction by the
      person promising or ordering payment to do any act in addition
      to the payment of money, but the promise or order may contain
      (i) an undertaking or power to give, maintain, or protect collateral
      to secure payment, (ii) an authorization or power to the holder to
      confess judgment or realize on or dispose of collateral, (iii) a
      waiver of the benefit of any law intended for the advantage or
      protection of an obligor, (iv) a term that specifies the law that
      governs the promise or order, or (v) an undertaking to resolve in
      a specified forum a dispute concerning the promise or order.

RCW 62A.3-104(a).

   The UCC defines “holder” as follows:
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       “Holder” with respect to a negotiable instrument, means:
       (A) The person in possession of a negotiable instrument that is
           payable either to bearer or to an identified person that is the
           person in possession.

RCW 62A.1-201(b)(21).4

       And, critical to this case, article 3 makes clear that the holder of a

negotiable instrument is the person entitled to enforce (PETE) it:

       “Person entitled to enforce” an instrument means (i) the holder
       of the instrument, (ii) a nonholder in possession of the instrument
       who has the rights of a holder, or (iii) a person not in possession
       of the instrument who is entitled to enforce the instrument
       pursuant to RCW 62A.3-309 or 62A.3-418(d).
RCW 62A.3-301. 5

       The UCC’s definition of “holder” points to two other concepts

important to understanding negotiable notes: negotiation and indorsement.

“Negotiation” refers to the process of transferring rights in the instrument: it

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. “‘Indorsement’ means a signature . . . that . . .


       4
         The UCC defines “holder” in the general definitions section of article 1.
But, as seen, it defines holder “with respect to a negotiable instrument.” Article 3
governs negotiable instruments, and the UCC contains no other definition of
“holder.” Thus, at times this opinion will refer to an “article 3 holder,” meaning the
holder of a negotiable instrument governed by article 3.

       As used in article 3, “‘instrument’ means negotiable instrument.” RCW
       5

62A.3-104(b). Thus, this PETE statute refers only to negotiable instruments.
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Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

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 that

identifies a person to whom it makes the instrument payable) or a ‘blank

indorsement’ (i.e., one that does not identify such an individual).” 21st Mortg.

Corp. v. Nicholls, 25 Wn. App. 2d 795, 805, 525 P.3d 962 (2023) (citing 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). (Thus, another term for an instrument

indorsed in blank or to bearer is “bearer paper.”) If it is specially indorsed,

“negotiation requires transfer of possession of the instrument and its

indorsement by the holder.” RCW 62A.3-201(b).

       By its terms, article 3 applies only to negotiable instruments. There is

no similar uniform body of law governing issues related to debt instruments

that are not negotiable. 6 Instead, sources other than article 3 apply, including

article 9 of the UCC and the common law of contracts.


      6
          “A nonnegotiable instrument can be defined roughly as a writing containing
a promise or order to pay money which fails to meet other formal requisites of a
negotiable instrument but which resembles a negotiable instrument in form and
which, by its nature, is such that the original parties could reasonably contemplate
its transfer.” William F. Willier, Nonnegotiable Instruments, 11 SYRACUSE L. REV.
13 (1959); see RCW 62A.9A-102(47) (for purposes of article 9, an “instrument” is
“a negotiable instrument or any other writing that evidences a right to the payment
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          That means that the rules that apply to negotiable instruments do not

necessarily apply to nonnegotiable instruments. We next consider what this

all means in the specific context of mortgage notes.

   III.       Transferring rights in mortgage notes

          Under the UCC, there are two sets of rights in a mortgage note:

ownership rights and enforcement rights. Brown, 184 Wn.2d at 524.

Determining who holds each set of rights is critical, because only the person

entitled to enforce the note—the PETE—can foreclose on the deed of trust.

              A. Article 9 controls the transfer of ownership rights in notes
                 regardless of negotiability
          In a typical transaction, when a borrower issues a note to a payee, “the

note is initially owned by that payee.” UCC REPORT at 8. 7 At that point, the

payee is both the owner of the note and the person entitled to enforce the note.

Brown, 184 Wn.2d at 527-28. In the context of mortgage notes, the lender is

the original payee.



of a monetary obligation, is not itself a security agreement or lease, and is of a type
that in ordinary course of business is transferred by delivery with any necessary
indorsement or assignment” (emphasis added)).

          7
           PERMANENT ED. BD. FOR UCC APPLICATION OF THE UNIFORM
COMMERCIAL CODE TO SELECTED ISSUES RELATING TO MORTGAGE NOTES (2011)
(UCC REPORT), https://www.ali.org/sites/default/files/2024-09/PEB-Nov-2011.pdf
[https://perma.cc/S8L2-8ZLK].

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      But lenders often sell mortgage notes on the secondary market. Id. at

528. If a lender seeks to sell the note outright, article 9 of the UCC governs

that transaction. Id.; RCW 62A.9A-109(a)(3) (article 9 “applies to . . . [a] sale

of . . . promissory notes”). Article 9 determines whether a successful transfer

of ownership rights has occurred. Brown, 184 Wn.2d at 528. The owner’s

rights include the “right to the economic benefits of the note, such as monthly

mortgage payments and foreclosure proceeds.” Id. at 524.

      A purchaser of a mortgage note “gains ‘outright ownership’ of a note

when the three conditions in RCW 62A.9A-203(b) are satisfied.” Id. at 528

(citing UCC REPORT at 10). Relevant here, the seller “must either authenticate

a ‘security agreement’ that describes the note or deliver possession of the note

to the purchaser.” Id. at 528-29 (footnote omitted) (quoting RCW 62A.9-

203(b)(3)(A)-(B)). In this context, “authenticating a security agreement”

simply means signing a written purchase-and-sale agreement or assignment.

Id.at 529 & n.8; Whitman, supra, at 91. That means the owner of a mortgage

note does not necessarily possess the note. Instead, they might own the note

pursuant to a written assignment, without possession of the note.




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            B. Article 3 governs the transfer of enforcement rights in negotiable
               notes

      “If the mortgage note is a negotiable instrument, article 3 of the UCC

provides a largely complete set of rules governing the obligations of parties

on the note, including how to determine who may enforce those obligations

and, thus, to whom those obligations are owed.” UCC REPORT at 4 (footnote

omitted).

      These rules rely heavily on properly determining the PETE. Brown, 184

Wn.2d at 526. First, the borrower’s obligation on the note is to pay the amount

owed to the PETE. Id. (quoting RCW 62A.3-412). The borrower’s obligation

is discharged “only when the borrower pays the PETE.” Id. at 527 (citing

RCW 62A.3-602(a)). “After discharging its obligations to the PETE, the

borrower cannot thereafter be held liable on the note by another party, such as

the note owner.” Id. (citing RCW 62A.3-602(a)). The PETE also has the right

to negotiate with the borrower and modify the note. Id. at 526 (citing RCW

62A.3-604(a)). The PETE’s possession of a negotiable note provides the

borrower “‘with a relatively simple way of determining to whom his or her

obligation is owed and, thus, whom to pay in order to be discharged.’” Id. at

527 (quoting UCC REPORT at 8).

      Unlike transfer of ownership under article 9, which can be

accomplished by transfer of possession or by written assignment, under article
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3, “the right to enforce a negotiable note can be transferred only by delivery

of possession of the note itself.” Whitman, supra, at 85 (emphasis omitted);

RCW 62A.3-301.

      Reading articles 3 and 9 together shows that the sale of a negotiable

note may result in the bifurcation of ownership rights from enforcement

rights. In other words, the owner and the PETE might be different people,

depending on who possesses the note. Brown, 184 Wn.2d at 524-25 (a person

may be a PETE “‘even though the person is not the owner of the instrument

or is in wrongful possession of the instrument’” (emphasis omitted) (quoting

RCW 62A.3-301)). To give a simple example, imagine a lender sells a

mortgage note to Fannie Mae. The lender retains possession of the note and

acts as the note servicer. The lender is now the holder of the note, while Fannie

Mae is the owner. As holder, the lender collects payments, negotiates with the

borrower, and, if the borrower defaults, initiates foreclosure if directed to do

so by the owner. As note owner, Fannie Mae is entitled to the proceeds of

borrowers’ monthly payments and the proceeds of any foreclosure. Id. at 520-

24.




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          C. The UCC does not explicitly address the transfer of
             enforcement rights in nonnegotiable notes

      To reiterate, when a note is negotiable, it is relatively easy to determine

who has the right to enforce and thus who has the right to foreclose. One

simply looks to article 3’s PETE statute. The “holder” of a negotiable

instrument is always a PETE. RCW 62A.3-301.

      But if a note is not negotiable, then article 3’s rules about determining

the PETE do not apply. UCC REPORT at 4 n.13. Instead, “[l]aw other than

Article 3, including contract law, governs this determination for non-

negotiable mortgage notes.” Id.at 4 n.14.

      Defendants RRA and RTR argue that the governing law is the common

law of contracts. And they argue that under that law, the person in possession

of a nonnegotiable instrument indorsed in blank is always the person entitled

to enforce the instrument—just like the holder of a negotiable note governed

by article 3. Br. of Defs. at 35.

      Defendants are wrong. No Washington case resolves whether

ownership and enforcement rights in a nonnegotiable note can be held by

different parties, as they can with negotiable notes, or whether possession of

a nonnegotiable note indorsed in blank necessarily establishes the right to

enforce, as it does with negotiable notes. In fact, according to authorities that


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defendants themselves cite, the majority common law view is that while

enforcement rights in blank-indorsed nonnegotiable notes can be transferred

by delivery and indorsement of the note, those rights can also be transferred

by written assignment without delivery. Whitman, supra, at 97-98 & n.146

(collecting cases). In other words, under common law, the person in

possession of a nonnegotiable note indorsed in blank may not be the PETE.

      This issue will be discussed in greater detail below. For now, the salient

points are (1) an instrument is not negotiable unless it meets the formal,

statutory requirements for negotiability, which include an unconditional

promise or order to pay a fixed amount of money, (2) under article 3, the

holder of a negotiable note is, by definition, entitled to enforce the note and

thus to foreclose on the deed of trust, and (3) under common law contract

principles, the person in possession of a nonnegotiable note indorsed in blank

is not necessarily entitled to enforce the note.

          D. Facts and procedural history

      With this background in mind, we turn to the facts of this case. In 2005,

plaintiff Marquez Vargas financed the purchase of his home using an “80/20

mortgage.” Clerk’s Papers (CP) Doc. 67, at 3-4 (order). In an 80/20 mortgage,

the borrower finances 80 percent of the purchase price using a traditional

mortgage and uses a subordinate HELOC to finance the remaining 20 percent.
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Id. Marquez Vargas obtained both the traditional mortgage and the

subordinate HELOC from lender Countrywide Home Loans Inc. Id. (The

traditional mortgage is not at issue here.)

      To obtain the line of credit, Marquez Vargas signed a “Home Equity

Credit Line Agreement and Disclosure Statement” (HELOC agreement or

note) on December 12, 2005. The HELOC agreement is indorsed in blank by

Countrywide’s managing director. CP Doc. 42-1, at 15-24. Marquez Vargas

secured the HELOC agreement with a deed of trust to the home. CP Doc. 27-

2, at 31-35.

      The HELOC agreement’s own language says that the agreement was a

line of credit: it imposed a credit limit of $59,900 and the lender agreed to

“lend money to [Marquez Vargas] from time to time” upon Marquez Vargas’

“request for loans.” CP Doc. 42-1, at 15, 18. The HELOC agreement provided

for an initial 60-month draw period during which Marquez Vargas must make

monthly minimum payments that would not reduce any outstanding principal

balance. Id. at 15. At the expiration of the draw period, Marquez Vargas would

“no longer be able to obtain loans” and the principal balance would become

fixed. Id. A 180-month repayment period immediately followed, during which

Marquez Vargas had to make monthly payments toward principal and interest.

Id.

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      The HELOC agreement does not state that Marquez Vargas requested

or received any loans. A separate document entitled “Home Equity Line of

Credit Initial Draw Acknowledgment” stated that Marquez Vargas requested

an initial draw of $59,900 from his line of credit at the time of closing. CP

Doc. 27-5, at 110.

      Marquez Vargas defaulted on this HELOC agreement in 2011 and

failed to make any payments since then. CP Doc. 67, at 7. The principal

balance was $59,761.05 at the time of his default. Id.

      The note and deed of trust were sold several times. Defendant RRA

purchased the note and deed of trust in 2016. CP Doc. 67.

      In April 2022, loan servicer and defendant RTR executed a declaration

on behalf of RRA. It declared under penalty of perjury that RRA was both the

beneficiary of Marquez Vargas’ deed of trust and the “holder” in possession

of Marquez Vargas’ HELOC agreement. CP Doc. 27-6.

      In summer 2022, the trustee, defendant NST, served Marquez Vargas

with a notice of default and a notice of trustee’s sale. CP Doc. 42, at 12; CP

Doc. No. 27-7, at 2. In October 2022, Marquez Vargas filed the instant lawsuit

against defendants RRA, RTR, and NST in federal district court. He sought

to quiet title to his property and alleged violations of the FDCPA, the WCAA,



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and the CPA.8 CP Doc. 67, at 8. The parties agreed to enjoin the trustee’s sale

during the pendency of this action. CP Doc. 67.

      Marquez Vargas also moved to certify certain questions to this court.

Defendants opposed this motion, id. at 9, and filed their own motion to

dismiss. CP Doc. 27.

      The district court granted defendants’ motion to dismiss in part. It

dismissed Marquez Vargas’ quiet title claims and some of the FDCPA,

WCAA, and CPA claims. CP Doc. 67. It deferred ruling on the remaining

claims. And it granted Marquez Vargas’ motion to certify in part to answer

two questions necessary to decide those remaining claims. The federal court

asks us these two questions:

   (1) Whether a typical HELOC agreement1 that has a closed draw
       period and specified maturity date is a negotiable instrument
       under Article 3 of Washington’s Uniform Commercial Code? If
       the Court answers this question in the affirmative, it need not
       address the remaining question. Alternatively, the Court may
       choose to answer only the latter question.


   (2) Whether an alleged beneficiary under the Deed of Trust Act
       satisfies the requirement to show that it is “the holder of any
       promissory note or other obligation secured by the deed of trust,”
       [RCW] 61.24.030(7)(a), by executing a declaration under


      8
        Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692e, e(2), (5),
(10), 1692d(4), 1692f, f(l), (6); Washington’s Collection Agency Act (WCAA),
RCW §§ 19.16.110, .250(15), (16), (21), (23), .260(1)(a); and Washington’s
Consumer Protection Act (CPA), ch. 19.86 RCW.
                                       20
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

        penalty of perjury attesting that it is the holder of a HELOC
        agreement?
               ________________________________________________________________
                 1
                   A typical HELOC agreement provides a credit
               limit applicable during the draw period, during
               which the borrower is responsible for monthly
               interest-only payments, and a repayment period,
               during which the borrower is responsible for
               monthly payments including principal and interest.

Doc. 78, at 2 (Ord. Certifying Questions to Wash. Sup. Ct.). We accepted

review. 9

                                        ANALYSIS

   I.       A HELOC agreement, as defined in the certified question, is not a
            negotiable instrument because it is not an unconditional promise to
            pay a fixed amount of money

        The federal court’s first question is whether a HELOC agreement with

certain     characteristics     constitutes        a   negotiable    instrument.   Those

characteristics are the agreement provides a credit limit applicable to the

“draw period, during which the borrower” must make “monthly interest-only

payments”; the agreement has a “repayment period, during which the

borrower” must make “monthly payments including principal and interest”;




        9
          Northwest Consumer Law Center filed an amicus brief in support of
plaintiff, which defendants answered.
                                              21
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

the agreement has a specified maturity date; and the draw period has “closed.”

Id. at 2 n.1. We hold that such an agreement is not a negotiable instrument.

      As discussed, article 3 of the UCC defines “negotiable instrument.”

One of the requirements for a negotiable instrument is that it contain “an

unconditional promise or order to pay a fixed amount of money, with or

without interest or other charges described in the promise or order.” RCW

62A.3-104(a). At issue here is whether a HELOC agreement as defined meets

this first requirement. We conclude it does not.

      A traditional mortgage note is a promise to pay the fixed amount of

principal received by the borrower as a loan. But a HELOC agreement as

defined is not a promise to pay a fixed amount of money. “Rather, it is a

promise to repay draws that may be taken from time to time against a credit

limit.” Demakis v. SunTrust Bank, 312 So. 3d 1015, 1016 (Fla. Dist. Ct. App.

2021) (citing Third Fed. Sav. & Loan Ass’n v. Koulouvaris, 247 So. 3d 652,

653-55 (Fla. Dist. Ct. App. 2018)). The amount of principal due is “based on

a contingency—whether the borrower draws on the credit line.” SMS Fin. 30,

LLC v. Frederick D. Harris, MD, Inc., 2018-Ohio-2064, 112 N.E.3d 395, ¶17.

“[I]f the borrower never draws on the line of credit, nothing is owed.” Id. And

if the borrower does draw on the line of credit, one must look beyond the

agreement itself “in order to ascertain the principal owed.” Id. The HELOC

                                      22
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

agreement at issue in this case does not contain an unconditional promise to

pay a fixed amount of money; instead, it provides a credit limit and conditions

disbursal of any loans upon the borrower’s requests. CP Doc. 42-1, at 15, 18.

And to discern the amount of principal that was in fact disbursed as a loan,

one must look beyond the face of the HELOC agreement to a separate

document, the “draw acknowledgment.” CP Doc. 27-5, at 110. Thus, it is not

a negotiable instrument.

       The majority of jurisdictions to consider the issue have come to the

same conclusion: credit line agreements, including HELOC agreements, are

not negotiable instruments because they do not contain an unconditional

promise to pay a fixed amount of money and instead require reference to

separate documents to determine the principal amount borrowed. 10


       10
          See, e.g., Am. First Fed., Inc. v. Gordon, 2015 WL 3798210, at *9 (Conn.
Super. Ct. May 26, 2015) (“The authorities generally agree that lines of credit which
allow a borrower to draw sums up to a maximum amount are not negotiable
instruments because they do not comply with the provision of the Uniform
Commercial Code requiring that a negotiable instrument contain an unconditional
promise to pay a ‘sum certain’ or ‘fixed amount of money.’”), aff’d, 173 Conn. App.
573, 164 A.3d 776 (2017); Yin v. Soc’y Nat’l Bank Ind., 665 N.E. 2d 58, 63 (Ind.
Ct. App. 1996) (line of credit agreement not negotiable because “in order to
ascertain the principal owed, one must look beyond the agreement itself”); Heritage
Bank v. Bruha, 283 Neb. 263, 270, 812 N.W.2d 260 (2012) (“If reference to a
separate instrument or extrinsic facts is needed to ascertain the principal due, the
sum is not certain or fixed.” (internal quotation marks omitted)); OneWest Bank, NA
v. FMCDH Realty, Inc., 165 A.D.3d 128, 134, 83 N.Y.S.3d 612 (2018); Demakis,
312 So. 3d 1015; Koulouvaris, 247 So. 3d at 653 (no fixed amount where “[n]othing
on the face of the HELOC note indicates how much the Koulouvarises actually
borrowed”); SMS Fin., 112 N.E.3d at 400; PNC Bank, Nat’l Ass’n v. Unknown
                                         23
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

      Defendants argue that even if a HELOC agreement lacks a fixed

amount due on its face at the time it is executed, we should consider it

negotiable once the draw period has closed and the principal becomes fixed.

Br. of Defs. at 58. In support of this argument, defendants rely primarily on

Wishengrad v. Carrington Mortgage Services, 139 Nev. 116, 529 P.3d 880

(2023). In Wishengrad, the homeowners defaulted on payments under a

HELOC agreement. The court discussed whether a HELOC agreement was a

negotiable instrument that could be enforced under Nevada’s UCC.

      The homeowners argued that the HELOC agreement was not a

negotiable instrument because it was a revolving line of credit rather than an

unconditional promise to pay a fixed amount of money. Id. at 120. The Nevada




Successor Trs. of Robert C. Keck Revocable Living Tr., 2020 OK CIV APP 60, ¶24,
479 P.3d 238, 244, overruled on other grounds by MTGLQ Inv’rs, LP v.
Witherspoon, 2023 OK 62, 532 P.3d 21; U.S. Bank Tr. Nat’l Ass’n v. Richardson,
2022-Ohio-4753, 203 N.E. 3d 1290, ¶21; U.S. Bank Nat’l Ass’n v. Grob, 343 So. 3d
114, 116 (Fla. Dist. Ct. App. 2022); CadleRock Joint Venture LP v. Esperanza
Architecture & Consulting, Inc., 2021 COA 119, ¶17, 500 P.3d 402, 405; Bennett
v. CIT Bank, NA, 544 F. Supp. 3d 1225, 1231 (N.D. Ala. 2021); Chuchian v. Situs
Invs., LLC, 219 So. 3d 992, 993 (Fla. Dist. Ct. App. 2017); Cadle Co. v. Allshouse,
2007 WL 5472749 (Pa. Ct. Com. Pl. 2006), aff’d, 959 A.2d 455 (Pa. Super. Ct.
2008) (mem.); FFP Mktg. Co. v. Long Lane Master Tr. IV, 169 S.W.3d 402, 408
(Tex. App. 2005); Diversified Fin. Sys., Inc. v. Hill, Heard, O’Neal, Gilstrap &
Goetz, PC, 99 S.W.3d 349, 357 (Tex. App. 2003); Remington Invs., Inc. v.
Hamedani, 55 Cal. App. 4th 1033, 1042, 64 Cal. Rptr. 2d 376 (1997); Resol. Tr.
Corp. v. Oaks Apts. Joint Venture, 966 F.2d 995, 1001-02 (5th Cir. 1992); Cadle
Co. v. Richardson, 597 So. 2d 1052, 1055 (La. Ct. App. 1992); In re Hipp, Inc., 71
B.R. 643, 649 (Bankr. N.D. Tex. 1987); Farmers Prod. Credit Ass’n v. Arena, 145
Vt. 20, 22-23, 481 A.2d 1064 (1984).
                                        24
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

Supreme Court disagreed. The court acknowledged that on the face of the

HELOC agreement, “the ultimate sum that the Wishengrads would borrow

during the draw period was unknown.” Id. But that court relied on the fact that

the amount of principal due would become fixed at some later point: “the

amount that the Wishengrads withdrew under the agreement, which would

become due upon maturity, would indeed be certain and fixed upon the close

of the draw period.” Id. at 122. The court concluded that “a HELOC with a

closed draw period and specified maturity date . . . is an unconditional promise

to pay a fixed amount of money.” Id. at 120 (citing NEV. REV. STAT.

104.3104(1)).

      We decline to follow Wishengrad because it conflicts with clear

Washington law holding that “[n]egotiability is determined from the face, the

four corners, of the instrument at the time it is issued without reference to

extrinsic facts.” Bucci v. Nw. Tr. Servs., Inc., 197 Wn. App. 318, 329, 387

P.3d 1139 (2016) (emphasis added) (citing 5A RONALD A. ANDERSON,

ANDERSON ON THE UNIFORM COMMERCIAL CODE § 3-104:13, at 115 (3d ed.

1994) (citing Holsonback v. First State Bank of Albertville, 394 So. 2d 381

(Ala. Civ. App. 1980))); 21st Mortg. Corp., 25 Wn. App. 2d at 804-05.

Negotiability is “‘fixed at the time of execution’” and “‘turns entirely upon

the form of the instrument and the terms in which it is expressed.’” Mar v.

                                      25
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

Wash. Mut. Sav. Bank, 64 Wn.2d 793, 794, 394 P.2d 367 (1964) (quoting 11

AM. JUR. 2D, Bills and Notes § 2 (1963)). A nonnegotiable instrument cannot

transform into a negotiable one: “an instrument is negotiable for all purposes

or non-negotiable for all purposes.” Bank of Cal., NA v. Nat’l City Co., 141

Wash. 243, 244, 251 P. 561 (1926). While the face of the agreement need not

state the “current balance” due, it must state the actual amount of principal

initially borrowed. Bucci, 197 Wn. App. at 330-31 (promissory note that

stated a promise to repay a $1.53 million refinance loan was negotiable, even

though note also stated conditions under which principal might increase due

to negative amortization). Under Washington law, the fact that a draw period

has now closed and the principal amount due is now fixed is not relevant to

determining whether the note was negotiable at the time it was issued.

      Wishengrad’s reasoning does not persuade us to discard our long-

standing precedent. That opinion does not address any of the numerous

decisions (including those cited above at footnote 8) that have analyzed line

of credit agreements like HELOCs and concluded that they are not negotiable

instruments. Instead, the Wishengrad court relied solely on language from a

case that did not discuss the concept of negotiability at all. 139 Nev. at 119

(citing Webster Bank NA v. Mutka, 250 Ariz. 498, ¶9, 481 P.3d 1173 (Ct. App.

2021)). The issue in Mutka was what statute of limitations applied to missed

                                     26
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

payments under a HELOC agreement. Id. Mutka had nothing to do with

whether a HELOC agreement meets the “unconditional promise to pay a fixed

amount of money” requirement for negotiability.

         Defendants cite no other authority supporting their argument that a

HELOC agreement is a negotiable instrument. See Br. of Defs. at 59-61. We

find no persuasive authority that analyzes the statutory requirements for

negotiability and comes to that conclusion, either.11

         We therefore hold, in line with the majority viewpoint, that a HELOC

agreement as defined in the certified question is not a negotiable instrument.

Under Washington law, determining negotiability requires examining the

specific terms of the instrument at the time it was issued. The fact that an

agreement provides that the principal will become fixed at a future date fails

to satisfy the “fixed amount of money” requirement.

   II.        An alleged beneficiary under the DTA cannot satisfy RCW
              61.24.030(7)(a) by declaring that it is the holder of a nonnegotiable
              instrument

         The second question the federal court asked us is whether an alleged

beneficiary under the DTA satisfies the requirement to show that it is “the




         E.g., Tenn. State Bank v. Mashek, 616 S.W.3d 777, 794 (Tenn. Ct. App.
         11

2020) (referring to a HELOC agreement as a negotiable promissory note without
analyzing the requirements for negotiability).
                                          27
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

holder of any promissory note or other obligation secured by the deed of

trust,” RCW 61.24.030(7)(a), by attesting that it is the “holder” of such a

nonnegotiable HELOC agreement.

      As discussed, the DTA does not define “holder,” but article 3 of the

UCC does. Marquez Vargas argues that our prior case law “adopted” the

UCC’s definition of “holder” and thereby limited the term’s meaning to the

person in possession of a negotiable instrument who is entitled to enforce it.

Appellant’s Reply Br. at 5. Therefore, since a HELOC agreement is not a

negotiable instrument, Marquez Vargas argues that defendants cannot comply

with RCW 61.24.030(7)(a). Because compliance with that statute is a

prerequisite to nonjudicial foreclosure, Marquez Vargas argues that the

remedy of nonjudicial foreclosure is unavailable to defendants in this case.

      Defendants disagree. They point out that the DTA is silent as to

negotiability and that if the legislature had meant to restrict the nonjudicial

foreclosure to negotiable instruments, it would have said so. Br. of Defs. at

23. They argue that the legislature’s purpose in enacting RCW

61.24.030(7)(a) is still served if we interpret “holder” as encompassing

nonnegotiable instruments. Defendants also argue that the DTA uses the term

“holder” in other contexts where there would be no reason to believe the


                                      28
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

legislature intended to exclude nonnegotiable instruments. Br. in Answer to

Amicus Br. of Nw. Consumer L. Ctr. (Answer to Amicus) at 2-3.

      Defendants make some compelling points. But we agree with Marquez

Vargas. The plain language of the statute in context, combined with our prior

interpretations of the statute’s language and its legislative intent, compel us to

conclude that the legislature intended to restrict the term “holder” in this

context to the holder of a negotiable instrument.

          A. Interpreting “holder” in RCW 61.24.030(7)(a)

      This question presents an issue of statutory interpretation. When

interpreting a statute, our “fundamental objective is to ascertain and carry out

the Legislature’s intent, and if the statute’s meaning is plain on its face, then

the court must give effect to that plain meaning as an expression of legislative

intent.” Dep’t of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 9-10, 43

P.3d 4 (2002) (citing State v. J.M., 144 Wn.2d 472, 480, 28 P.3d 720 (2001)).

To determine plain meaning, we consider “statutory context, related statutes,

and the entire statutory scheme.” Swinomish Indian Tribal Cmty. v. Dep’t of

Ecology, 178 Wn.2d 571, 582, 311 P.3d 6 (2013).

      Our task in this case is made easier by the fact that this court has already

determined that by enacting the proof-of-beneficiary requirement in RCW


                                       29
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

61.24.030(7)(a), the legislature intended to “ensure the party with the

authority to enforce and modify the note is the party engaging in mediation

and foreclosure.” Brown, 184 Wn.2d at 543. Further, we have already

determined that the definition of “holder” from article 3 should “guide[]” our

interpretation of the term “holder” in the DTA’s definition of “beneficiary.”

Bain, 175 Wn.2d at 104.

       We give our prior decisions interpreting a statute great weight. In fact,

“[o]nce the Court has determined the meaning of a statute, that is what the

statute has meant since its enactment.” In re Pers. Restraint of Johnson, 131

Wn.2d 558, 568, 933 P.2d 1019 (1997) (citing In re Pers. Restraint of

Vandervlugt, 120 Wn.2d 427, 436, 842 P.2d 950 (1992); In re Pers. Restraint

of Moore, 116 Wn.2d 30, 37, 803 P.2d 300 (1991)). 12 We therefore begin by


       12
          We have historically applied a strict construction rule when interpreting
the DTA: “lenders must strictly comply with the statutes and courts must strictly
construe the statutes in the borrower’s favor” because the DTA “dispenses with
many protections commonly enjoyed by borrowers under judicial foreclosures.”
Albice v. Premier Mortg. Servs. of Wash., Inc., 174 Wn.2d 560, 567, 276 P.3d 1277
(2012) (citing Udall v. T.D. Escrow Servs., Inc., 159 Wn.2d 903, 915-16, 154 P.3d
882 (2007); Koegel v. Prudential Mut. Sav. Bank, 51 Wn. App. 108, 111-12, 752
P.2d 385 (1988)). The conclusion that the DTA provides less protection to
borrowers than judicial foreclosure may be an outdated one. Currently, the DTA
provides for foreclosure mediation, a program that is available only to borrowers
facing nonjudicial foreclosure. Answer to Amicus at 12 (citing RCW 61.24.163(1),
.165). Defendants provide statistics suggesting that foreclosure mediation helps
borrowers retain their homes. Id. at 11 (citing WASH. DEPT. OF COM., QUARTERLY
PERFORMANCE         REPORT,      FY25       QUARTER         3    (Jan.-Mar.      2025),
https://deptofcommerce.box.com/s/z9sov8mwh6lelqormtdwvhma08cymbdo).
They also cite studies suggesting that the default rate in judicial foreclosure cases is
                                          30
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

considering our prior interpretations of the plain language of RCW

61.24.005(2) and RCW 61.24.030(7)(a).

           B. Our case law makes clear that a beneficiary, and thus a holder,
              must be the person entitled to enforce a mortgage note

               i. Bain v. Metropolitan Mortgage Group, Inc. (2012)

       We first considered the meaning of the DTA’s terms “beneficiary” and

“holder” in Bain, 175 Wn.2d 83. There, the plaintiff homeowners’ deeds of

trust named Mortgage Electronic Registration System Inc. (MERS) as

beneficiary and “nominee” for the lender. When plaintiffs defaulted, MERS,

purporting to act as beneficiary, appointed successor trustees who initiated

foreclosure proceedings. Id. at 89.

       But MERS conceded that it did not “hold” any promissory notes. Resp.

Br. of Def. MERS at 34, Bain v. Metro. Mortg. Grp., Inc., No. 86206-1 (Wash.

Ct. App. (2011)). Plaintiffs argued that MERS therefore could not be a

beneficiary within the meaning of RCW 61.24.005(2), which defines a

beneficiary as the holder of the note or obligation secured by the deed of trust.



high, at least in other states. Id. at 15. There may be reason, then, for the legislature
or this court to revisit our prior conclusions about the borrower-friendliness of the
DTA at some point. However, it is not necessary to do so in this case. Instead, we
adhere to our prior interpretation of the legislative intent behind RCW
61.24.030(7)(a) and conclude that interpreting “holder” as limited to the holder of a
negotiable instrument comports best with that intent.
                                           31
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

Plaintiffs thus argued that MERS’ actions in appointing successor trustees

were unlawful.

      MERS responded that parties were free to contract around the DTA’s

definition of beneficiary. Bain, 175 Wn.2d at 99.

      We rejected that argument. We reemphasized the core principle that the

note and the mortgage cannot be split and that only the person entitled to

enforce a note may foreclose on a deed of trust. Id. at 96-97. We explained

that the legislature’s use of the term “beneficiary” in other parts of the DTA

showed legislative intent that a beneficiary must be the person entitled to

enforce the mortgage note. For example, in the Foreclosure Fairness Act of

2011, which amended the DTA, the legislature stated that it “‘intends to . . .

[c]reate a framework for homeowners and beneficiaries to communicate with

each other to reach a resolution and avoid foreclosure whenever possible.’”

Id. at 103 (quoting LAWS OF 2011, ch. 58, § 1). This provision wouldn’t make

sense if “beneficiary” could include an entity like MERS that did not have

authority to enforce, modify, or discharge the note, because such an entity

would be unable to negotiate a resolution with the borrower. Id.

      Bain supported this conclusion by applying the principle that we

consider related statutes when construing statutory terms. Id. (citing Campbell

& Gwinn, 146 Wn.2d at 11-12). We determined that the UCC is a related

                                      32
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

statute that is relevant to interpreting the DTA. We quoted two provisions

from the UCC: the definition of “holder” and article 3’s definition of “person

entitled to enforce.” Id. at 104 (quoting former RCW 62A.1-201(20) (2001);13

RCW 62A.3-301). We stated that “our interpretation of the deed of trust act

should be guided by these UCC definitions, and thus a beneficiary must either

actually possess the promissory note or be the payee.” Id.

       Bain shows that in requiring a DTA beneficiary to be a “holder” of the

note, the legislature intended at minimum that the beneficiary be a PETE with

authority to enforce the note and foreclose on the deed of trust. See id.

       Plaintiff argues that Bain went further than just saying that a beneficiary

must have the authority to enforce the note. Plaintiff argues that Bain

“adopted” the UCC definition of “holder” and “required actual possession of

a negotiable instrument to proceed with foreclosure.” See Pl.’s Opening Br. at

59-61; Appellant’s Reply Br. at 5-6.

      Bain did rely on the UCC’s definition of “holder” (which refers to the

holder of a negotiable instrument) and article 3’s definition of “person entitled

to enforce” to figure out what the DTA meant when it used the term “holder.”




       13
         As discussed above, the definition of “holder” is currently codified at RCW
62A.1-201(b)(21)(A). The definition that Bain considered is the same in relevant
respects as the current definition.
                                        33
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

But negotiability was not an issue in Bain, so there was little reason for the

court to consider whether there would be a distinction in the way the DTA

treated negotiable versus nonnegotiable notes.

      Later decisions of the Court of Appeals and this court, however, do

interpret the term “holder” as limited to the UCC definitions of “holder” and

“person entitled to enforce.” We summarize those decisions below. They

show that our precedent does tell us to interpret the term “holder” as plaintiff

suggests.

            ii. Lyons v. U.S. Bank National Association (2014) and Trujillo
                v. Northwest Trustee Services., Inc. (2015)

      In Lyons v. U.S. Bank National Association, the trustee relied on a

beneficiary declaration from Wells Fargo Bank and initiated nonjudicial

foreclosure. 181 Wn.2d 775, 336 P.3d 1142 (2014). The declaration was

ambiguous about how Wells Fargo claimed it achieved beneficiary status; it

stated:

             “Wells Fargo Bank, NA, . . . is the actual holder of the
      promissory note or other obligation evidencing the above-
      referenced loan or has requisite authority under RCW 62A.3-301
      [article 3’s PETE statute] to enforce said obligation.”

Id. at 780 (emphasis added) (quoting court papers). Lyons sued the trustee

under the CPA, arguing in part that the trustee failed to comply with former


                                      34
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

RCW 61.24.030(7)(a) (2012) because the trustee relied on a deficient

beneficiary declaration. Id. at 782.

      We held that the beneficiary declaration was deficient: “On its face, it

is ambiguous whether the declaration proves Wells Fargo is the holder or

whether Wells Fargo is a nonholder in possession or person not in possession

who is entitled to enforce the provision under RCW 62A.3-301.” Id. at 791

(emphasis added). But “only a holder has the requisite authority to act as a

beneficiary under Bain.” Id. Thus, we held that the beneficiary declaration

did not comply with former RCW 61.24.030(7)(a) and reversed summary

judgment on Lyons’ CPA claim. Id. at 788-89.

      By contrasting the term “holder” with the two other methods of

attaining article 3 PETE status listed in RCW 62A.3-301, Lyons implies that

“holder” carries the article 3 meaning as well.

      We reaffirmed Lyons in Trujillo v. Northwest Trustee Services, Inc.,

183 Wn.2d 820, 355 P.3d 1100 (2015). There, the plaintiff homeowner sued

the trustee for violating the DTA by relying on a beneficiary declaration

identical to the one in Lyons. Applying Lyons, we held that the declaration

was “ambiguous about whether Wells Fargo actually held the note when it

initiated the foreclosure,” and because the plaintiff alleged that the trustee

relied on this ambiguous declaration to initiate foreclosure, she had alleged

                                       35
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

facts sufficient to prove a violation of the DTA. Id. at 833-34 (citing Lyons,

181 Wn.2d at 790).

      Thus, Lyons and Trujillo rely on Bain for the rule that a beneficiary

must prove article 3 holder status to satisfy RCW 61.24.030(7)(a). Several

Court of Appeals decisions do so, too. E.g., Bavand v. OneWest Bank, FSB,

176 Wn. App. 475, 498-99, 309 P.3d 636 (2013), abrogated in part on other

grounds by Frias v. Asset Foreclosure Servs., Inc., 181 Wn.2d 412, 334 P.3d

529 (2014); Blair v. Nw. Tr. Servs., Inc., 193 Wn. App. 18, 34-36, 372 P.3d

127 (2016).

      But again, as in Bain, negotiability was not an issue in these cases, so

the court did not explicitly consider the distinction between negotiable and

nonnegotiable notes and why the legislature might want to distinguish

between them.

              iii. Brown v. Department of Commerce (2015)

      In Brown v. Department of Commerce, however, we concluded that the

legislature’s “clear purpose” in enacting RCW 61.24.030(7)(a) was “to ensure

the party with the authority to enforce and modify the note is the party

engaging in mediation and foreclosure.” 184 Wn.2d at 543. That conclusion

about legislative intent decides the issue in this case.


                                       36
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

       In Brown, we first considered the distinction between a note’s owner

and its holder. There, a homeowner facing foreclosure sought to participate in

the DTA’s foreclosure mediation program, which required that “a beneficiary

of a deed of trust must mediate with a residential borrower before the

borrower’s home may be foreclosed.” 184 Wn.2d at 514 (citing RCW

61.24.163). But the mediation program contained an exemption for certain

small banks. Id. (citing RCW 61.24.166).

       Brown defaulted on her mortgage obligations, received a notice of

default, and sought to participate in mediation. The Department of Commerce

denied her request on the ground that the beneficiary of Brown’s deed of trust

fell within this small-bank exemption. The department was certainly correct

if the small bank that was the holder of Brown’s note was the beneficiary; but

it was incorrect if the very big, nonexempt Freddie Mac, which owned the

note, was the beneficiary. Id.

       The department argued that the DTA’s definition of “beneficiary”

unambiguously showed that the beneficiary is the holder of the note. Id. at

533.

       But two provisions of the DTA created ambiguity as to whether the

beneficiary for purposes of the mediation provisions must be the holder or the

owner. The mediation provisions required that once parties are referred to

                                     37
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

mediation, the alleged beneficiary must provide proof that it is the “owner” of

the note. RCW 61.24.163(5)(c). A copy of the declaration described in former

RCW 61.24.030(7)(a) would provide sufficient proof of ownership. Id.

       The declaration described in former RCW 61.24.030(7)(a), however,

did not require the beneficiary to swear to ownership status; it required the

beneficiary to swear to holder status. Former RCW 61.24.030(7)(a) provided

that prior to initiating a trustee sale,

       the trustee shall have proof that the beneficiary is the owner of
       any promissory note or other obligation secured by the deed of
       trust. A declaration by the beneficiary made under the penalty of
       perjury stating that the beneficiary is the actual holder of the
       promissory note or other obligation secured by the deed of trust
       shall be sufficient proof as required under this subsection.

(Emphasis added.)

       We explained that these provisions were ambiguous “in cases where

the owner of the note is different from the holder of the note.” Brown, 184

Wn.2d at 534. If the owner and holder are different entities, then former RCW

61.24.030(7)(a) makes no sense—an alleged beneficiary’s declaration that it

is the “actual holder” of the note would not prove that it was also the “owner”

of the note. Likewise, if the owner and holder are different entities, an alleged

beneficiary’s declaration that it is the holder of the note would not satisfy

RCW 61.24.163(5)(c), which required the alleged beneficiary in mediation to

prove it is the owner of the note.
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Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

      To reconcile this ambiguity and determine legislative intent, we looked

to statutory context, case law, and legislative history. The mortgage note in

Brown was negotiable, so article 3 concepts applied. Id. at 524. Given the

article 3 PETE’s role as the entity with the power to enforce, modify, and

discharge a debt, Brown concluded that where ownership and enforcement

rights in a negotiable note are split between two parties, the legislature

intended the holder, who by definition has PETE status, to be the party

participating in mediation and foreclosure—not the owner. Id. at 543.

      We confirmed this interpretation by examining the legislative history

behind former RCW 61.24.030(7)(a), which was adopted at the same time as

the mediation provisions. That history showed that the legislature was

concerned that few homeowners “‘know who has the authority to negotiate

with them due to loan repackaging.’” Id. (quoting S.B. REP. ON S.B. 5810, at

3-4, 61st Leg., Reg. Sess. (Wash. 2009) (S.B. 5810 Report) 14). Legislators

expressed the viewpoint that the foreclosing party “‘should have to present

the paper to prove they have authority to foreclose.’” Id. (quoting S.B. 5810

Report).




      14
        http://lawfilesext.leg.wa.gov/biennium/2009-10/Pdf/Bill%
20Reports/Senate/5810%20SBA%20FIHI%2009.pdf
                                      39
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

      We therefore concluded that in enacting RCW 61.24.030(7)(a), “[t]he

legislature’s clear purpose was to ensure the party with the authority to

enforce and modify the note is the party engaging in mediation and

foreclosure. As discussed above, the holder of the note, the PETE, is the

person with the authority to enforce and modify the note.” Id. We held that

the small bank, not Freddie Mac, was the beneficiary of Brown’s note. Id. at

544. That meant that Brown was not entitled to participate in the statutory

foreclosure mediation program because the bank was small enough to be

exempt from that process. Id.

          C. The legislature’s 2018 amendment to RCW 61.24.030(7)(a)
             shows it intended to adopt our prior interpretation of “holder”
             and confirms that its proof-of-beneficiary requirement is meant
             to ensure that the alleged beneficiary has authority to enforce the
             note

      In 2018, the legislature amended RCW 61.24.030(7)(a) to remove

reference to the “owner” of the note. As quoted throughout this opinion, the

statute now requires the alleged beneficiary to prove only that it is the “holder”

of the note. LAWS OF 2018, ch. 306, § 1.

      This amendment is important. We “presume the Legislature is familiar

with past judicial interpretations of its enactments.” Glass v. Stahl Specialty

Co., 97 Wn.2d 880, 887, 652 P.2d 948 (1982) (citing Bixler v. Bowman, 94

Wn.2d 146, 149, 614 P.2d 1290 (1980)). Thus, this “court’s prior use or
                                       40
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

interpretation of a term will be considered in ascertaining the meaning of a

statute.” State v. Faust, 93 Wn. App. 373, 378, 967 P.2d 1284 (1998) (citing

Gimlett v. Gimlett, 95 Wn.2d 699, 702, 629 P.2d 450 (1981); Miller v. Paul

Revere Life Ins. Co., 81 Wn.2d 302, 308, 501 P.2d 1063 (1972)). When the

legislature amends a statute after this court’s interpretation of that statute, we

presume that the new legislation is consistent with our prior interpretation

unless we find “clear legislative intent to abrogate” our binding interpretation.

Antio, LLC v. Dep’t of Revenue, 3 Wn.3d 882, 890, 557 P.3d 672 (2024)

(citing Friends of Snoqualmie Valley v. King County Boundary Rev. Bd., 118

Wn.2d 488, 496, 825 P.2d 300 (1992); In re Marriage of Williams, 115 Wn.2d

202, 208, 796 P.2d 421 (1990)).

      Bain held that by including the term “holder” in the “beneficiary”

definition, the legislature wanted to ensure that the beneficiary of a deed of

trust was the PETE, reaffirming the principle that the mortgage follows the

note. Brown confirmed that in enacting the beneficiary declaration provision

in RCW 61.24.030(7)(a), the legislature wanted to ensure that the borrower

knows that the beneficiary is really the PETE. Lyons and Trujillo went further,

interpreting Bain as holding that the beneficiary must be the article 3 holder

of the note—even though there are additional ways to achieve PETE status

under article 3.

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Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

       This was the context in which the legislature decided to retain the term

“holder” unchanged when it deleted “owner” from RCW 61.24.030(7)(a). In

making that decision, the legislature ensured that this court’s interpretations

of “holder,” described above, were accurately reflected in its laws.15

       The dissent argues that instead of showing that the legislature

acquiesced in this court’s prior interpretation of “holder,” the 2018

amendment shows that the legislature rejected our interpretation.

       The dissent is wrong. First, the dissent completely ignores the main

change that the legislature made to the statute: it deleted the term “owner.” As

discussed above, this change brings the previously ambiguous statute in

alignment with Brown’s analysis.

       Next, the dissent focuses on a minor change made by the 2018

amendment: the legislature replaced “the promissory note” with “any

promissory note” in the second sentence of the statute. LAWS OF 2018, ch. 306,

§ 1(7)(a) (emphasis added). The dissent asserts that this was an earthshaking

change that showed which the statute’s coverage was growing.




       15
          Bain, Lyons, and Trujillo seemed to use the terms “owner” and “holder”
interchangeably. This was likely because all of these cases were interpreting the
prior version of RCW 61.24.030(7)(a), which required the beneficiary to establish
that it was both the owner and the holder of the note, and before Brown clarified the
distinction between the rights of an owner and the rights of a holder.
                                         42
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

       But that is incorrect: the change from “the” to “any” simply made that

second sentence more clearly conform to the language of the first sentence,

which already contained “any” rather than “the.” Specifically, prior to the

2018 amendment, former RCW 61.24.030(7)(a) provided that prior to

initiating a trustee sale,

       the trustee shall have proof that the beneficiary is the owner of
       any promissory note or other obligation secured by the deed of
       trust. A declaration by the beneficiary made under the penalty of
       perjury stating that the beneficiary is the actual holder of the
       promissory note or other obligation secured by the deed of trust
       shall be sufficient proof as required under this subsection.

Following this court’s decision in Brown, which focused on the distinction

between an owner and a holder of a negotiable promissory note, the legislature

made the major change of deleting the term “owner” and replaced “actual

holder” with “holder.” That reflected Brown’s holding. But at the same time,

the legislature changed the descriptor “the” in the first sentence to “any” to

conform to its use of descriptors in the second sentence. As a result of those

2018 amendments, the current version of the statute provides:

       the trustee shall have proof that the beneficiary is the holder of
       any promissory note or other obligation secured by the deed of
       trust. A declaration by the beneficiary made under the penalty of
       perjury stating that the beneficiary is the holder of any
       promissory note or other obligation secured by the deed of trust
       shall be sufficient proof as required under this subsection.



                                      43
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

      The fact that the legislature changed the modifier from “the” to “any”

in the second sentence to conform its language with a phrase that the statute

already contained is not really evidence that the legislature intended to reject

this court’s prior, narrowing interpretations of the statute. We usually require

much more evidence that the legislature intended to abrogate our prior case

law. Antio, 3 Wn.3d at 890 (“A court must find clear legislative intent to

abrogate a binding judicial decision.”).

      Indeed, the dissent agrees that our precedent “narrow[s] the reach of the

statute” by limiting the meaning of “holder” to the holder of a negotiable

instrument. Dissent at 12. The dissent seems to disagree with that precedent.

It even goes so far as suggesting that Bain is no longer good law, stating that

the 2018 amendments to subsection (7)(a) mean that “reliance on the UCC’s

definitions is unnecessary and erroneous.” Id. at 15. In making this argument,

the dissent goes further than any party did—no one has argued that Bain, or

any other case relevant to this issue, should be overruled.

      Some of the dissent’s arguments may have been plausible

interpretations prior to our decisions in Bain, Lyons, Trujillo, and Brown. But

those cases all limited the scope of the DTA’s term “holder.” And the

legislature acquiesced in that limitation when it amended the statute and

retained the term “holder.”

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Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

        This legislative acquiescence explains why one of defendants’ other

arguments fails. Defendants argue that the term “holder” is used outside of the

context of negotiable instruments. And they argue that the legislature’s use of

the term “holder” in another provision of the DTA “suggest[s] that its meaning

should not be limited to the definition of a ‘holder’ of a negotiable

instrument.” Answer to Amicus at 2. Defendants point out that RCW

61.24.040, which relates to the required contents of a notice of trustee’s sale,

uses the term “holder” several times. For example, that statute requires the

trustee to send notice to “the holder of any conveyances of any interest or

estate in . . . the property” and the “last holder of record” of certain subordinate

liens    against   the   property     under    certain    circumstances.     RCW

61.24.040(1)(B)(iii)-(v).

        To be sure, courts have used the term “holder” outside the context of

negotiable instruments (although the decisions Defendants cite to show this

all predate the adoption of the UCC). See Br. of Defs. at 28.16 But defendants


        16
          The dissent places great weight on a 1985 Court of Appeals case, Rodgers
v. Seattle-First Nat’l Bank, 40 Wn. App. 127, 132, 697 P.2d 1009 (1985), for the
conclusion that “someone can be a ‘holder’ of a nonnegotiable instrument.” Dissent
at 13-14. As cited above, we do not dispute that some courts have referred to the
“holder” of a nonnegotiable note. But Rodgers’ passing use of the term “holder” in
reference to terms contained in a nonnegotiable note does not affect our analysis
here for several reasons. Rodgers had nothing to do with the scope of the term
“holder” as used in the DTA. Further, much of that decision’s analysis is no longer
good law because it relies on now-outdated versions of UCC article 9. Finally, of
                                        45
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

do not explain how the uses of the term “holder” in RCW 61.24.040 suggest

that its meaning should include “holders” of nonnegotiable instruments.

RCW 61.24.040 existed in 2018, when the legislature amended RCW

61.24.030(7)(a) and affirmatively agreed with this court’s interpretation of

“holder.” The legislature has kept the word “holder” in RCW 61.24.040; we

thus presume that the legislature agrees that “holder” carries the meaning this

court gave it in that statute, too.

          D. Because the person in possession of a nonnegotiable note is not
             necessarily the PETE, an alleged beneficiary’s declaration that
             it is the holder of a nonnegotiable note does not fulfill the
             legislature’s intent to ensure that the borrower knows the alleged
             beneficiary has authority to foreclose
       Defendants agree that the purpose of RCW 61.24.030(7)(a) is to ensure

that the party seeking to foreclose is the party with the authority to enforce the

note. Br. of Defs. at 33-34. They argue that this concept is what the legislature

intended to capture with the term “holder,” but that the legislature did not

intend to limit nonjudicial foreclosure to negotiable instruments. Id. at 34.

Defendants contend that just like with negotiable notes, possession of a

nonnegotiable note indorsed in blank is sufficient to establish that the

possessor is the person entitled to enforce the note. Id. Thus, defendants argue



course, that Court of Appeals opinion is not controlling—instead, the controlling
law on the meaning of the term “holder” includes the more recent precedent from
this court, including Bain, Lyons, Trujillo, and Brown.
                                       46
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

that reading “holder” to encompass a person in possession of a nonnegotiable

note indorsed in blank would be consistent with legislative intent. Id. at 34,

18-19. 17

       But an alleged beneficiary’s declaration that it is the “holder” in

possession of a nonnegotiable note indorsed in blank does not necessarily

inform the borrower that the beneficiary has authority to enforce the note.

       As noted, “[l]aw other than Article 3, including contract law, governs”

the determination of enforcement rights for nonnegotiable mortgage notes.

UCC REPORT at 4 n.14. Defendants argue that the common law of contract

applies and that under that law, possession of a nonnegotiable instrument

indorsed in blank necessarily indicates the right to enforce the instrument. Br.

of Defs. at 40.

       Defendants are certainly correct that the majority common law view is

that it is possible to transfer the right to enforce a nonnegotiable note “in

exactly the same way as a negotiable note.” Whitman, supra, at 97-98 &




       17
          Defendants also argue that Washington courts have “applied the DTA to
other equity lines of credit.” Br. of Defs. at 43-45 (citing OneWest Bank, FSB v.
Erickson, 185 Wn.2d 43, 73-74, 367 P.3d 1063 (2016); Bert Kuty Revocable Living
Tr. ex rel. Nakano v. Mullen, 175 Wn. App. 292, 297, 305, 306 P.3d 994 (2013)).
Neither case they cite is on point. First, Erickson dealt with a judicial foreclosure
and specifically stated that the DTA did not apply. 185 Wn.2d at 74. Second,
negotiability was not an issue in either of these cases.
                                         47
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

nn.143, 144 (collecting cases). So, if a nonnegotiable note is indorsed in blank,

it is possible to transfer the right to enforce it by physical delivery to a

transferee. See, e.g., id.; Puget Sound State Bank v. Wash. Paving Co., 94

Wash. 504, 517, 162 P. 870 (1917) (nonnegotiable notes indorsed in blank are

“capable of passing their title by delivery”); see also Br. of Defs. at 36-37

(collecting cases). Thus, possession of a nonnegotiable note indorsed in blank

may indicate that the possessor has authority to enforce the note.

      But there is ample authority—including authority cited by

defendants—that possession of a nonnegotiable note indorsed in blank does

not necessarily indicate that the possessor has authority to enforce the note.

See Br. of Defs. at 36-37. Professor Whitman, on whose work defendants rely,

states that while some decisions hold that possession is necessary for

enforcement of a nonnegotiable note, “a substantial majority” of jurisdictions

“recognize the validity of a transfer [of enforcement rights] by a separate

document of assignment, without indorsement or delivery of the note itself.”

Whitman, supra, at 97-98 & n.146 (emphasis added) (collecting cases). See

also Dale A. Whitman & Drew Milner, Symposium, Foreclosing on Nothing:

The Curious Problem of the Deed of Trust Foreclosure Without Entitlement

To Enforce the Note, 66 ARK. L. REV. 21, 31 & n.42 (2013) (“It is clear that,

unlike a negotiable instrument, enforcement rights in a nonnegotiable note can

                                       48
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

be transferred by a separate document of assignment.” (citing Margiewicz v.

Terco Props. of Miami Beach, Inc., 441 So. 2d 1124, 1125 (Fla. Dist. Ct. App.

1983); Bank of N.Y. v. Raftogianis, 13 A.3d 435, 438 (N.J. Super. Ct. Ch. Div.

2010))).

       That means that “possession is not a reliable indicium of the right to

enforce nonnegotiable notes, as it is for negotiable notes.” Whitman, supra, at

99; accord William F. Willier, Nonnegotiable Instruments, 11 SYRACUSE L.

REV. 13, 14-15 (1959); OneWest Bank, NA v. FMCDH Realty, Inc., 165

A.D.3d 128, 134, 83 N.Y.S.3d 612 (2018) (for purposes of summary

judgment, plaintiff’s possession of nonnegotiable note indorsed in blank was

not sufficient to establish that plaintiff had the right to enforce).18

       We find no Washington case that directly answers the question whether

possession of a nonnegotiable instrument necessarily indicates the right to

enforce. But given that the majority of jurisdictions applying the common law

hold that delivery of possession is not necessary to transfer the right to enforce

a nonnegotiable note, we decline to adopt defendants’ contrary position. The

result is that interpreting the DTA’s term “holder” to include the possessor of


       18
           Even if article 9, not the common law, controlled the transfer of
enforcement rights in a nonnegotiable note, our conclusion would be the same. As
seen, article 9 permits the transfer of an instrument by written assignment only. See
UCC REPORT at 8-9 (discussing UCC 9-203(b)); Whitman, supra, at 96.

                                         49
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

a blank-indorsed nonnegotiable note flouts the legislative intent behind RCW

61.24.030(7)(a): to communicate to the borrower with certainty that the

alleged beneficiary has authority to enforce the note and thus authority to

foreclose.19

      The result is completely different for a negotiable instrument governed

by article 3. The holder of a negotiable note by definition possesses the note

and has authority to enforce it. Thus, when an alleged beneficiary declares

that it is the “holder” of a negotiable note, the borrower knows that the

beneficiary has authority to foreclose. This fulfills the legislative purpose

behind RCW 61.24.030(7)(a). 20



      19
          Defendants argue that in practical terms, even if it is possible that the
possessor of a nonnegotiable note may not be the PETE (because someone else
holds the right to enforce by written assignment), this circumstance is unlikely to
occur and would be “contrary to business custom.” Br. of Defs. at 40 n.15. That is
because article 9 provides an incentive for buyers to take possession of notes in
order to perfect their ownership interests. Id. (citing Whitman, supra, at 99-100).
But defendants provide no evidence for their factual assertions about business
custom. Since the majority common law rule permits transfer of enforcement rights
in a nonnegotiable note by written assignment without delivery, interpreting the
DTA’s “holder” concept to include the possessor of such a note would not serve
RCW 61.24.030(7)(a)’s purpose of communicating to the borrower that they are in
fact dealing with the PETE.
      20
          Defendants argue that the editors’ comments to UCC section 3-104 suggest
that article 3’s provisions may apply to nonnegotiable instruments by analogy. Br.
of Defs. at 30. However, “[w]hether such application is appropriate depends upon
the facts of each case.” UCC § 3-104 cmt. 2. Here, interpreting “holder” to include
the possessor of a nonnegotiable note is not appropriate because doing so would not
support the legislative intent behind RCW 61.24.030(7)(a), as discussed above.
                                        50
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

      The dissent’s remaining arguments against interpreting “holder” this

way fail. First, the dissent argues that the beneficiary declaration provision in

RCW 61.24.030(7)(a) would be “wholly unnecessary” if a beneficiary must

be the holder of a negotiable note, because in that case “the foreclosing party

would simply produce the note” in order to establish PETE status. Dissent at

4. This argument overlooks the fact that RCW 61.24.030(7)(a) does not

require a declaration; it requires proof of holder status, and it provides that a

beneficiary declaration is sufficient, not necessary, to prove holder status.

RCW 61.24.030(7)(a) (“A declaration by the beneficiary made under the

penalty of perjury stating that the beneficiary is the holder of any promissory

note or other obligation secured by the deed of trust shall be sufficient proof

as required under this subsection.”). In other words, the statute already

contemplates that a beneficiary could prove holder status in some other way,

such as producing the note. The legislature is free to create multiple means by

which a beneficiary can prove holder status, and that doesn’t make the

declaration provision meaningless or unnecessary.

      Next, the dissent argues that our interpretation of “holder” somehow

“renders the injunction remedy provided in [RCW 61.24.130] meaningless.”

Dissent at 5. RCW 61.24.130(1) provides, “Nothing contained in this chapter

shall prejudice the right of the borrower, grantor, any guarantor, or any person

                                       51
Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

who has an interest in, lien, or claim of lien against the property or some part

thereof, to restrain, on any proper legal or equitable ground, a trustee’s sale.”

(Emphasis added.) The dissent fails to explain how holding that a beneficiary

must be the holder of a negotiable note renders any portion of this statute

meaningless, superfluous, or without effect. Our holding does not prevent a

borrower, grantor, guarantor, or other person with an interest in the property

from seeking an injunction on any proper legal or equitable ground as

provided by the statute.

      We conclude that “holder” as used in RCW 61.20.030(7)(a) and RCW

61.24.005(2) means the holder of a negotiable instrument governed by article

3. Thus, we answer no to the second certified question.

                                 CONCLUSION

      We answer both certified questions no. A HELOC agreement as defined

in the certified question is not a negotiable instrument because it lacks an

unconditional promise to pay a fixed amount of money. And a “holder” under

the DTA means the holder of a negotiable instrument governed by article 3.

Thus, an alleged beneficiary under the DTA cannot satisfy the prerequisite to

nonjudicial foreclosure that it is “the holder of any promissory note or other

obligation secured by the deed of trust,” RCW 61.24.030(7)(a), by executing

a declaration under penalty of perjury attesting that it is the holder of a

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Marquez Vargas v. RRA CP Opportunity Trust et al., No. 103735-0

HELOC agreement. This conclusion does not deprive lenders or their assigns

of other, judicial, remedies.




       WE CONCUR:




                                               Yu, J.P.T.




                                     53
Marquez Vargas v. RRA CP Opportunity Trust 1 et al.




                                               No. 103735-0


        MADSEN, J.P.T. ∗ (dissenting)—There is no question that in Washington, a

HELOC (home equity line of credit) is typically a loan secured by a deed of trust against

real property that may be subject to foreclosure if payments are not made, and the

outstanding balance must be repaid according to the loan’s repayment terms after the

draw period ends. The majority holds that the deed of trust act’s (DTA), ch. 61.24 RCW,

nonjudicial foreclosure procedure is not available to foreclose a deed of trust securing a

HELOC because the statute is limited to negotiable instruments. I disagree with its

narrow reading and cannot join the majority for two main reasons.

        First, I believe that whether the HELOC agreement at issue here is a negotiable

instrument is irrelevant in determining whether an alleged beneficiary under the DTA can

satisfy RCW 61.24.030(7)(a) by declaring it is the holder of a promissory note since the

statute, by its plain language, is applicable to both negotiable and nonnegotiable

instruments.


∗
 Justice Barbara Madsen is serving as a justice pro tempore of the Supreme Court pursuant to Washington
Constitution article IV, section 2(a).
No. 103735-0
(Madsen, J.P.T., dissenting)


       Second, I believe the use of the term “holder” in RCW 61.24.030(7)(a) is not

controlled by the Uniform Commercial Code’s (UCC) definition of the term and has a

broader meaning based on the differences in the language and purposes of each statute.

See RCW 62A.1-201(b)(21)(A).

       Because the DTA is not limited to negotiable instruments, the only certified

question we need to answer is whether an alleged beneficiary under the DTA need only

execute a declaration under penalty of perjury attesting that it is the holder of a HELOC

agreement pursuant to RCW 61.24.030(7)(a) to show that it is “‘the holder of any

promissory note or other obligation secured by the deed of trust.’” Doc. 78, at 2 (Ord.

Certifying Questions to Wash. Sup. Ct.) (quoting RCW 6.24.030(7)(a)). I would answer

in the affirmative. This answer rests on what constitutes a “holder” as used in RCW

61.24.030(7)(a), which I discuss below.

                                          DISCUSSION

The DTA Is Not Limited to Negotiable Instruments

       The question of what constitutes a “holder” in RCW 61.24.030(7)(a) is a matter of

statutory interpretation. The majority concludes that a “holder” under the statute is

limited to a holder as defined in RCW 62A.1-201(b)(21), which governs negotiable

notes. I disagree for many reasons, starting with the purposes underlying the UCC and

the nonjudicial foreclosure statute.

       The UCC provides a structured legal framework related to negotiable instruments

by regulating their validity, negotiation, enforcement, and the allocation of rights and

                                             2
No. 103735-0
(Madsen, J.P.T., dissenting)


defenses among parties. See ch. 62A.3 RCW. It is a comprehensive set of laws

governing commercial transactions. Uniform Commercial Code, UNIF. L. COMM’N,

https://www.uniformlaws.org/acts/ucc [https://perma.cc/RHR9-JBV8]. States have

adopted the code to ensure that businesses can enter into contracts knowing that the terms

will be enforced in the same way by courts across the country. Id. Section 3 of the code

governs negotiable instruments that represent a promise to pay a sum of money to any

person who is in possession of the instrument if it is indorsed in blank. Id.; ch. 62A.3

RCW. To enforce the note, lawful possession and proper endorsement (where required)

are typically necessary.

       In contrast, chapter 61.24 RCW provides a method to resolve defaulted loans

guaranteed by a deed of trust with definitions and regulations unique to foreclosure of

deeds of trust. The DTA includes its own definitions, regulations, and defenses that are

very different from those in the UCC. The process of nonjudicial foreclosure relies on

the contractual “power of sale” clause in a deed of trust, allowing a trustee to sell the

property upon default, not on the existence of a negotiable instrument. RCW

61.24.030(1).

       The legislature’s intent in adopting the nonjudicial foreclosure statute is markedly

different from its adoption of the UCC. Specifically, the legislature found that

“[p]rolonged foreclosures contribute to the decline in the state’s housing market, loss of

property values, and other loss of revenue to the state.” LAWS OF 2011, ch. 58, § 1(b).




                                              3
No. 103735-0
(Madsen, J.P.T., dissenting)


The statute is intended to provide a faster, less expensive way to resolve default on deeds

of trust.

         With this overview I turn to the meaning of “holder” as used in RCW 61.24.030.

“Whenever possible, we interpret the statutory language such that ‘no clause, sentence or

word shall be superfluous, void, or insignificant.’” Velazquez Framing, LLC v. Cascadia

Homes, Inc., 2 Wn.3d 552, 555, 540 P.3d 1170 (2024) (internal quotation marks omitted)

(quoting City of Seattle v. Long, 198 Wn.2d 136, 148, 493 P.3d 94 (2021)).

         First, RCW 61.24.030(7)(a) requires a declaration that an alleged beneficiary is a

holder of any note. 1 As explained above, enforcement of a negotiable note under the

UCC requires possession of the instrument, or satisfaction of the lost-note provisions

under RCW 62A.3-309. RCW 62A.3-301. “Holder” status under the UCC is determined

by objective facts: possession and proper indorsement (if required). If the legislature

intended RCW 61.24.030(7)(a) to apply only to negotiable notes as the majority says,

then the required declaration would be wholly unnecessary, adding nothing legally

meaningful, since the foreclosing party would simply produce the note. 2 There would be

no need for the trustee to provide a sworn statement to establish what the UCC already

governs. Instead, the existence of the declaration requirement makes sense only if the



1
  “[F]or residential real property . . . before the notice of trustee’s sale is recorded, transmitted, or served, the trustee
shall have proof that the beneficiary is the holder of any promissory note or other obligation secured by the deed of
trust. A declaration by the beneficiary made under the penalty of perjury stating that the beneficiary is the holder of
any promissory note or other obligation secured by the deed of trust shall be sufficient proof . . . .” RCW
61.24.030(7)(a).
2
  Although a beneficiary declaration is sufficient but not necessary to prove that the beneficiary is the holder of any
promissory note, the point still stands that where a party could simply produce the note, there is no need for a
declaration.

                                                              4
No. 103735-0
(Madsen, J.P.T., dissenting)


legislature anticipated situations where the party enforcing the note is not relying solely

on possession of the note.

       Second, limiting the meaning of “holder,” and therefore the nonjudicial

foreclosure statute, to negotiable notes renders the injunction remedy provided in the

statute meaningless. Under RCW 61.24.130, borrowers may seek to enjoin a trustee’s

sale based on violations of the DTA. This presupposes that authority to foreclose can be

contested. But, under the UCC, if the foreclosing party has possession of a negotiable

note indorsed in blank, then enforcement is guaranteed since possession resolves the

issue. Or if a negotiable note has a special indorsement, then possession and a proper

indorsement resolves the issue. Possession is still required in both scenarios. The

majority states that its holding “does not prevent a borrower, grantor, guarantor, or other

person” from seeking an injunction on any proper legal or equitable ground. Majority at

52. Although it does not prevent a person or entity from doing so, the remedy is rendered

hollow where production of the note is all that it takes to establish enforcement authority.

       Further, as the majority notes, in Brown v. Department of Commerce, 184 Wn.2d

509, 543, 359 P.3d 771 (2015), this court determined that “[t]he legislature’s clear

purpose [in enacting RCW 61.24.030(7)(a)] was to ensure the party with the authority to

enforce and modify the note is the party engaging in mediation and foreclosure.” See

majority at 6. But, under the UCC, a negotiable instrument cannot be materially

modified absent a separate agreement by both parties. RCW 62A.3-117.




                                              5
No. 103735-0
(Madsen, J.P.T., dissenting)


       This raises an important question. Why would the legislature create a detailed

injunction process, impose presale notice and declaration requirements, and allow

challenges to beneficiary status if the relevant question is possession of the negotiable

instrument as the UCC provides? The injunction remedy makes sense only if foreclosure

authority is not self-proving, and compliance with the DTA involves more than

possession. Clearly, including injunction process, imposing presale notice and

declaration requirements, and allowing challenges to beneficiary status are necessary

only if the DTA also applies to nonnegotiable instruments.

       Third, the term “holder” is used throughout the DTA, outside the context of

negotiable instruments. See RCW 61.24.040(1)(b)(iii)-(v), (2)(d). If a statute’s meaning

is plain on its face, then we give effect to that plain meaning. “The ‘plain meaning’ of a

statutory provision is to be discerned from the ordinary meaning of the language at issue,

the context of the statute in which that provision is found, related provisions, and the

statutory scheme as a whole.” State v. Engel, 166 Wn.2d 572, 578, 210 P.3d 1007

(2009); Dep’t of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 9, 43 P.3d 4 (2002).

       The majority fails to analyze how the legislature’s repeated use of the term

“holder” outside the context of negotiable instruments makes a difference to its ultimate

conclusion. I believe it demonstrates that if the legislature intended the term to have a

special meaning related only to negotiable instruments, it would have made a distinction

in using that term, particularly when there is both a general and technical meaning to the

term. Had the legislature intended to limit “holder” in RCW 61.24.030(7)(a) to the

                                              6
No. 103735-0
(Madsen, J.P.T., dissenting)


definition of “holder” in the UCC, it would have cross-referenced RCW 62A.1-

201(b)(21), which defines “holder” with respect to negotiable instruments.

       In sum, the majority’s interpretation of “holder” as applying only to UCC holders

imposes the UCC’s formal limitations into a statute that is textually and structurally

broader and that serves an entirely different purpose. Nothing in the DTA’s language

indicates an intent to confine its operation to instruments meeting the technical

requirements of negotiability. To read such a restriction into the DTA statute creates

arbitrary distinctions among economically identical transactions. The better

interpretation is that the DTA applies to transferable payment obligations generally, not

merely those classified as negotiable instruments. The plain language of the statute

supports this interpretation.

       Construing the statute to apply only to negotiable instruments collapses the DTA

into the UCC and many critical sections of the DTA become superfluous.

Where we already have a statutory scheme regulating nonjudicial foreclosure, it is not

necessary to look beyond the DTA to determine what was meant by the term “holder.”

Other courts in states that use deeds of trust in nonjudicial foreclosures do not look to the

UCC for assistance when they have a statutory scheme regulating nonjudicial foreclosure.

See Debrunner v. Deutsche Bank Nat’l Tr. Co., 204 Cal. App. 4th 433, 441, 138 Cal.

Rptr. 3d 830 (2012) (“we are not convinced that the cited sections of the California

Uniform Commercial Code (particularly § 3301) displace the detailed, specific, and

comprehensive set of legislative procedures the Legislature has established for

                                              7
No. 103735-0
(Madsen, J.P.T., dissenting)


nonjudicial foreclosures”); Hogan v. Wash. Mut. Bank, NA, 230 Ariz. 584, 586, 277 P.3d

781 (2012) (“The UCC does not govern liens on real property. The trust deed statutes do

not require compliance with the UCC before a trustee commences a non-judicial

foreclosure.” (citation omitted)); see also Dale A. Whitman, How Negotiability Has

Fouled Up the Secondary Mortgage Market, and What to Do About It, 37 PEPP. L. REV.

737, 762-63 (2010) (hereinafter Whitman, How Negotiability Has Fouled Up) (“U.C.C.

Article 3 has no application to nonnegotiable notes”).

       Instead, the legislature’s intent in requiring the beneficiary declaration should

guide our interpretation of the term “holder.” The legislature’s intent was to ensure that

the borrowers know who they should be interacting with in the event of a foreclosure and

who has the authority to foreclose. See S.B. REP. ON S.B. 5810, at 3-4, 61st Leg., Reg.

Sess. (Wash. 2009). In this context, where the statute applies to both negotiable and

nonnegotiable notes, the more reasonable interpretation is to conclude that “holder”

means the person or entity with the power to foreclose.

       As the majority explains, enforcement rights in negotiable notes can be transferred

only by delivery of possession of the note itself; meanwhile it seems possible that

nonnegotiable notes may be transferred by delivery of possession or by a separate

document of assignment. Dale A. Whitman & Drew Milner, Foreclosing on Nothing:

The Curious Problem of the Deed of Trust Foreclosure Without Entitlement To Enforce

the Note, 66 ARK. L. REV. 21, 31 (2013). Despite this difference, “[a]s a practical matter,

there is little functional difference between secondary market sales of negotiable and

                                              8
No. 103735-0
(Madsen, J.P.T., dissenting)


nonnegotiable notes, despite the formal distinctions . . . between Article 3 and the

common law. The system works as well for nonnegotiable notes as it does for negotiable

notes.” Dale A. Whitman, Transferring Nonnegotiable Mortgage Notes, 11 FLA. A&M

U. L. REV. 63, 100 (2015). Moreover, even if a note is assigned, possession of the note is

still incentivized so that the assignee can have superpriority benefits under article 9 of the

UCC. Id. at 99.

       Thus, the power to foreclose may derive from actual possession of the note for

both negotiable and nonnegotiable notes or through a written assignment for

nonnegotiable notes. However, if a person or entity without the power or authority to

initiate a nonjudicial foreclosure proceeded to do so, borrowers are not without any

remedies. They may file suit to enjoin the sale. See RCW 61.24.130 (“Nothing

contained in this chapter shall prejudice the right of the borrower . . . to restrain, on any

proper legal or equitable ground, a trustee’s sale.”).


The Legislature’s 2018 Amendment Demonstrates That It Did Not Acquiesce in This
Court’s Prior Decisions

       As previously discussed, the DTA makes no distinction between negotiable and

nonnegotiable instruments, and if the legislature had intended to limit nonjudicial

foreclosure to negotiable instruments it would have done so. Instead, RCW 61.24.020

provides that “[a] deed conveying real property to a trustee in trust to secure the

performance of an obligation of the grantor or another to the beneficiary may be

foreclosed by trustee’s sale.” The only exception is for a deed of trust conveying real


                                               9
No. 103735-0
(Madsen, J.P.T., dissenting)


property that is used principally for agricultural purposes. No other restriction is

included. Thus, the DTA focuses on whether a deed of trust secures a promissory note or

other obligation, rather than on the negotiability of that instrument.

       Although the legislature did not define the term “holder” in the DTA, it defined

the term “beneficiary.” The DTA defines “beneficiary” broadly: it “means the holder of

the instrument or document evidencing the obligations secured by the deed of trust,

excluding persons holding the same as security for a different obligation.” RCW

61.24.005(2) (emphasis added). Under the UCC, a “holder” with respect to negotiable

instruments means “[t]he person in possession of a negotiable instrument that is payable

either to bearer or to an identified person that is the person in possession.” RCW 62A.1-

201(b)(21)(A).

       Prior to the 2018, RCW 61.24.030(7)(a) provided that “[a] declaration by the

beneficiary made under the penalty of perjury stating that the beneficiary is the actual

holder of the promissory note or other obligation secured by the deed of trust shall be

sufficient proof” that the beneficiary is the holder for purposes of serving a notice of sale.

LAWS OF 2012, ch. 185, § 9 (emphasis added).

       Under Bain v. Metropolitan Mortgage Group, Inc., 175 Wn.2d 83, 104, 285 P.3d

34 (2012), only a holder has the requisite authority to act as beneficiary and a holder must

possess the promissory note in line with the UCC’s definition of “holder” and “person

entitled to enforce.” The court concluded that the DTA should be guided by the UCC’s

definitions. Id. Both Lyons v. U.S. Bank National Association, 181 Wn.2d 775, 336 P.3d

                                              10
No. 103735-0
(Madsen, J.P.T., dissenting)


1142 (2014), and Trujillo v. Northwest Trustee Services, Inc., 183 Wn.2d 820, 355 P.3d

1100 (2015), relied on the holding in Bain to reach their decisions. They concerned

ambiguous beneficiary declarations stating that the alleged beneficiary “is the actual

holder of the promissory note or other obligation evidencing the above-referenced loan or

has requisite authority under RCW 62A.3–301 to enforce said obligation.” Lyons, 181

Wn.2d at 780 (emphasis added). The issue was the additional language “or has requisite

authority” because it was unclear whether the alleged beneficiary was the “actual holder”

as was required by the former statute or whether the beneficiary was potentially a

nonholder with the authority to enforce the obligation. In Lyons and Trujillo the

beneficiary declarations were insufficient because it was unclear whether the alleged

beneficiary was in possession of the note and thus was an “actual holder.”

       After these cases were decided, the legislature amended the statute in 2018 to say

that “[a] declaration by the beneficiary made under the penalty of perjury stating that the

beneficiary is the . . . holder of . . . any promissory note or other obligation secured by the

deed of trust shall be sufficient proof as required under this subsection.” LAWS OF 2018,

ch. 306, § 1 (emphasis added). Thus, it removed the word “actual” before holder and

changed “the” promissory note to “any” promissory note.

       To support its position, the majority states that the legislature’s 2018 amendment

to RCW 61.24.030(7)(a) shows that the legislature has acquiesced to this court’s current

interpretation of the term “holder.” Majority at 40-42. That conclusion is unsupportable.

Rather, changing “the” promissory note to “any” promissory note and the legislature’s

                                              11
No. 103735-0
(Madsen, J.P.T., dissenting)


purpose in requiring a declaration, suggests that its intent was to broaden the meaning of

the term “holder,” not to acquiesce in those prior holdings that significantly narrow the

reach of the statute. 3

         These revisions are telling. Any promissory note encompasses both negotiable and

nonnegotiable promissory notes. When interpreting statutes, “the court should assume

that the legislature means exactly what it says.” City of Snohomish v. Joslin, 9 Wn. App.

495, 498, 513 P.2d 293 (1973). If the legislature intended to limit the statute to

negotiable instruments, what would have been the purpose of changing the statute to say

“any” promissory note? Adding the word “any” actually conflicts with the UCC’s

definition since “holder” under the UCC is limited to only negotiable instruments, not to

any promissory note. “[A]ny promissory note” can encompass both negotiable and

nonnegotiable promissory notes, suggesting the legislature intended a broader definition

of “holder” than the UCC’s definition. RCW 61.24.030(7)(a).

         The majority attempts to diminish the impact of the legislature’s change of the

word “the” to “any” by stating that the legislature simply made the change to make the

sentence conform to the language used in the first sentence of the same provision. The

first sentence also used the descriptor “any” before the term “promissory note.” See id.

This does not change the fact that Washington courts have construed “‘[a]ny’ [to] mean[]




3
 In addition to predating the 2018 amendment to the statute, which broadened the term “holder,” the shortfall in
Bain is that it did not analyze negotiability before deciding the meaning of “beneficiary” by looking at the UCC’s
definitions.


                                                         12
No. 103735-0
(Madsen, J.P.T., dissenting)


‘every’ and ‘all.’” State v. Westling, 145 Wn.2d 607, 611, 40 P.3d 669 (2002) (citing

State v. Smith, 117 Wn.2d 263, 271, 814 P.2d 652 (1991)); see Jong Choon Lee v.

Hamilton, 56 Wn. App. 880, 884, 785 P.2d 1156 (1990); State v. Harris, 39 Wn. App.

460, 463, 693 P.2d 750 (1985). “The word ‘any’ is a broad and inclusive term with

respect to subject matter.” S.L. Rowland Constr. Co. v. Beall Pipe & Tank Corp., 14 Wn.

App. 297, 306, 540 P.2d 912 (1975). The majority robs the term “any” of its meaning

with its current interpretation that the provision is limited to negotiable notes. The

legislature could have changed the descriptor in the first sentence from “any” to “the,”

but instead it changed “the” to “any” in the second sentence. This clearly indicates that

the legislature wanted it to apply to any promissory note.

       Although not binding, a prior case from the Court of Appeals discusses

nonnegotiable notes secured by a deed of trust. In Rodgers v. Seattle–First National

Bank, 40 Wn. App. 127, 129, 697 P.2d 1009 (1985), Columbia Pacific Mortgage Inc.

(CPM), the lender, made a loan to the borrowers (the Nobles) to finance construction of a

house. The Nobles gave CPM a nonnegotiable note and deed of trust to secure the note.

Id. CPM assigned the note and deed of trust to Seattle–First National Bank, who took

possession of the note and recorded the assignment of the deed of trust. Id. “The note

provided payments were to be made to CPM in Richland ‘or such other place … as the

holder of this Note may designate in writing from time to time.’” Id. at 130 (alteration in

original) (emphasis added). Though not explicitly stated, the language in the note implies




                                             13
No. 103735-0
(Madsen, J.P.T., dissenting)


that someone can be a “holder” of a nonnegotiable instrument and that enforcement

authority can be transferred. 4

         The legislature’s purpose in requiring a declaration also supports this

interpretation. Its purpose was to ensure that the party with the authority to enforce the

note was the one initiating the nonjudicial foreclosure. In the case of negotiable notes, a

person may be entitled to enforce a note under three different circumstances. See RCW

62A.3-301(i)-(iii). 5 One exception to the requirement of possessing the note includes if a

person is not in possession, so they are not a “holder” as defined in RCW 62A.1-

201(b)(21)(A)-(C), but one who is entitled to enforce the instrument pursuant to RCW

62A.3-309 or 62A.3-418(d). Id. Meanwhile, “[t]he right to enforce a nonnegotiable note

can be transferred by physical delivery, but it can also be transferred by a separate

document of assignment.” Whitman, How Negotiability Has Fouled Up, supra, at 758-

59. Therefore, a declaration is needed by the alleged beneficiary under the penalty of

perjury.




4
  The sole issue in Rodgers was “whether an obligor who had actual notice of an assignment of a deed of trust may
be discharged upon payment to the assignor when the assignee would have told the obligor to pay the assignor if the
obligor had inquired.” 40 Wn. App. at 128. The court discussed how “one paying a note, either negotiable or
nonnegotiable, should demand production of it upon payment or risk having to pay again to the assignee.” Id. at 132.
However, it noted that the rule regarding production of the note has been severely criticized since “‘[t]oday the note
is usually unavailable when the final payment is made.’” Id. at 132 n.3 (quoting GEORGE E. OSBORNE, GRANT S.
NELSON & DALE A. WHITMAN, REAL ESTATE FINANCE LAW 346 n.7 (1979)). It then provided three exceptions
which may discharge an obligor in the mortgage context, such as if a plausible explanation is given for not
producing the documents or if an assignor was given authority to collect payments and thus be the agent of the
assignee. Id. at 133.
5
  “[N]egotiability requires that, for every loan sold on the secondary market, the original promissory note must be
delivered to the purchaser. In a national or global market, this requirement is extremely inefficient and inconvenient,
and in recent years, has been widely ignored, much to the detriment of mortgage purchasers.” Whitman, How
Negotiability Has Fouled Up, supra, at 740.

                                                          14
No. 103735-0
(Madsen, J.P.T., dissenting)


         Previously, this court agreed that the DTA should be guided by UCC definitions

without analyzing the consequences when a note is nonnegotiable. Following the

addition of the word “any” as explained above, reliance on the UCC’s definitions is

unnecessary and erroneous. 6 We do not need to look beyond the DTA to determine the

meaning of “holder,” and applying the UCC’s definition of holder with respect to

negotiable instruments is not practical where the DTA applies to both negotiable and

nonnegotiable instruments.

         Even if we hold that possession of the note is required to be a holder, RRA CP

Opportunity Trust 1 possessed the original promissory note indorsed in blank and

provided a beneficiary declaration that is sufficient under RCW 61.24.030(7)(a). As a

result, it should be able to initiate nonjudicial foreclosure proceedings.

Nonjudicial Foreclosures May Benefit Borrowers

         Lastly, as the majority notes, labeling nonjudicial foreclosures as providing less

protection to borrowers is an outdated concept. As discussed previously, borrowers can

enjoin the nonjudicial foreclosure under the DTA and raise related claims in court.

Furthermore, failure to bring a civil action to enjoin a sale does not constitute waiver if

the claims are relating to damages asserting fraud, misrepresentation, violations of Title


6
 The majority states that I argue that Bain is no longer good law and should be overruled, an argument that no one
has raised. Majority at 44. Bain agreed to look to UCC definitions to interpret the DTA. 175 Wn.2d at 104. It did
so in reaching its holding that “only the actual holder of the promissory note or other instrument evidencing the
obligation may be a beneficiary” under the DTA. Id. at 89. I do not disagree with its holding that a holder is a
beneficiary. Rather, the point is that the term “holder” should not be limited to the UCC’s definition, which is an
argument raised by the defendants. Bain did not analyze the issue of whether an entity may be a holder of a
nonnegotiable instrument under the DTA and the legislature amended the statute after Bain as discussed above.
There is no need to overrule Bain. I simply advocate for applying the plain language of the statute as revised post-
Bain.

                                                         15
No. 103735-0
(Madsen, J.P.T., dissenting)


19 RCW, failure of a trustee to comply with chapter 61.24 RCW, and a violation of RCW

61.24.026. See RCW 61.24.127(1)(a)-(d).

          Additionally, the legislature has amended the DTA to provide borrowers facing

nonjudicial foreclosure with a mediation program to help prevent borrowers from losing

their homes at no cost to the borrower. See RCW 61.24.163. A recent quarterly report

on the mediation program shows that of the 69 cases referred to mediation, 58

agreements were reached and 49 homes were retained. WASH. STATE DEP’T OF COM.,

QUARTERLY PERFORMANCE REPORT, FY25 QUARTER 3 (Jan.-Mar. 2025). 7 The addition

of the mediation program clearly suggests the legislature believes the nonjudicial

foreclosure process protects both lenders and borrowers.

          The DTA “balances the interests of borrowers and lenders. It provides a

comparatively inexpensive mechanism for lenders to foreclose on real property pledged

to secure a debt through nonjudicial foreclosure, making certain types of loans easier for

borrowers to obtain because lenders have faster recourse if the loan is not repaid.” Wash.

Fed. v. Harvey, 182 Wn.2d 335, 336-337, 340 P.3d 846 (2015) (footnote omitted).

Moreover, it limits recovery to whatever is recouped from the nonjudicial foreclosure and

generally does not allow the lender to pursue a deficiency judgment against the borrower.

Id. Therefore, the lender “must be satisfied with what it gets.” Id. Whether nonjudicial

foreclosure is better or worse for a borrower may depend on the specific circumstances,

including the value of the property at issue, the outstanding debt, and the desire for


7
    https://deptofcommerce.box.com/s/z9sov8mwh6lelqormtdwvhma08cymbdo

                                                   16
No. 103735-0
(Madsen, J.P.T., dissenting)


antideficiency protection. See RCW 61.24.100(1) (“a deficiency judgment shall not be

obtained on the obligations secured by a deed of trust against any borrower . . . after a

trustee’s sale under that deed of trust”). It may also depend on whether the borrower

wants to avoid the legal costs associated with a judicial foreclosure as well as the

accumulation of interest if judicial foreclosures take a lengthier amount of time. Whether

it is of benefit to a lender also entails similar considerations since it may not recoup all

that is owed in exchange for a more efficient and less expensive process. In other words,

nonjudicial foreclosure can work to the benefit of both the holder of a note and the

borrower.

       With these considerations in mind, I respectfully dissent.




                                            ______________________________________
                                                           Madsen, J.P.T.




                                             _____________________________________




                                             _____________________________________




                                              17