Land Home Financial Services, Inc., V. Stelis, Llc

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON LAND HOME FINANCIAL No. 86160-3-I SERVICES, INC., a California corporation, DIVISION ONE Respondent, UNPUBLISHED OPINION v. STELIS, LLC, a Delaware limited liability company, Respondent, and DBI COINVESTOR FUND VIII, LLC, a Delaware limited liability company; DREAMBUILDER INVESTMENTS, LLC, a New York limited liability company; and PETER ANDREWS, Appellants. FELDMAN, J. — The lawsuit at issue in this appeal is part of a complex commercial dispute involving multiple parties and multiple lawsuits in various state and federal courts. DBI Coinvestor Fund VIII LLC, Dreambuilder Investments LLC, and Peter Andrews (collectively DBI) challenge the trial court’s entry of judgment against them after affirming and adopting a referee’s decisions and orders. DBI argues the referee lacked authority to resolve this litigation and that the trial court’s No. 86160-3-I decision violated DBI’s statutory and due process rights. Finding no entitlement to relief, we affirm. I Land Home Financial Services, Inc. (Land Home) is a servicer of mortgage loans. DBI is a private equity investment fund that purchases, services, and liquidates defaulted residential home mortgages nationwide. Stelis LLC (Stelis) is an investor. In August 2013, Land Home entered into a specialty loan servicing agreement (SLSA) with Stelis and DBI to provide administrative services for a residential home loan portfolio in which DBI and Stelis held interests. The SLSA states that DBI is the “asset management agent” for the loans and Stelis is the “investor.” DBI and Stelis are also collectively referred to as the “Client.” The SLSA includes a governing law provision indicating that the parties “agree to submit to the jurisdiction of California courts” in Orange County. In February 2015, Ophrys LLC (Ophrys), in its capacity as manager of Stelis, notified Land Home that Stelis was terminating DBI as the asset manager for the loans and instructed Land Home to continue servicing the loan portfolio pursuant to the SLSA. In response, DBI told Land Home that Stelis had no authority to terminate DBI as asset management agent and instructed Land Home to take direction from DBI regarding loans owned by Stelis. Faced with this conflict, Land Home retained outside counsel and elected to follow Stelis’s instructions. The dispute spawned numerous lawsuits between various parties in multiple venues, two of which are of particular relevance here. In March 2015, -2- No. 86160-3-I Stelis sued DBI in King County Superior Court asserting that DBI breached obligations as mortgage servicer for loan portfolios held by Stelis (the “Stelis v. DBI lawsuit”). 1 In December 2015, Land Home filed a complaint against DBI and Stelis in Orange County, California seeking declaratory relief as to which entity Land Home should take directions from (the “first Land Home lawsuit”). In May 2016, DBI and Stelis entered into a settlement agreement (the 2016 SA) to resolve nine pending lawsuits in New York, California, and Washington, including the Stelis v. DBI lawsuit and the first Land Home lawsuit. 2 In the 2016 SA, the parties agreed to “submit to the jurisdiction of the Superior Court of Washington for King County and the Hon. Bruce W. Hilyer as referee” for “resolution of all disputes arising out of this Settlement Agreement.” The 2016 SA includes a dispute resolution clause providing that “any dispute or controversy relating to this Settlement Agreement, including the implementation, interpretation, application, or enforcement of this Settlement Agreement, shall be resolved in accordance with the procedures set forth in RCW 4.48 (Trial Before Referee).” In accordance with the 2016 SA, the trial court entered an agreed injunction in the Stelis v. DBI lawsuit and appointed Judge Hilyer as referee. In January 2017, following the execution of the SLSA, Land Home voluntarily dismissed the first Land Home lawsuit without prejudice. In March 2018, DBI filed a lawsuit against Land Home in Orange County, California alleging Land Home breached the SLSA by following the directions of Stelis and not DBI 1 Stelis v. DBI, King County Superior Court Cause No. 15-2-06898-9 SEA. 2 The 2016 SA defines the “DBI Parties” as Dreambuilder Invs., LLC, DBI Coinvestor Fund VIII, LLC, Gregory Palmer, and Peter Andrews, and it defines the “Ophyrs Parties” as Stelis, LLC, Cerastes, LLC, Ophrys, LLC, Oak Harbor Capital X, LLC, and William S. Weinstein. -3- No. 86160-3-I (the second Land Home lawsuit). 3 In May 2018, Land Home and DBI stipulated to the