*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Electronically Filed
Supreme Court
SCWC-XX-XXXXXXX
22-FEB-2023
08:24 AM
Dkt. 5 MO
SCWC-XX-XXXXXXX
IN THE SUPREME COURT OF THE STATE OF HAWAII
DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR
MORGAN STANLEY ABS CAPITAL I INC. TRUST 2006-NC4,
Respondent/Plaintiff-Appellee,
vs.
BLAINE T. YATA,
Petitioner/Defendant-Appellant,
and
BROOKE J.C. RIOPTA; AMBER M. RIOPTA; CASIE A. RIOPTA,
and COUNTY OF KAUAI WASTEWATER MANAGEMENT, Defendants.
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CAAP-XX-XXXXXXX; CIV. NO. 5CC141000185)
MEMORANDUM OPINION
(By: Recktenwald, C.J., Nakayama, McKenna, Wilson, and Eddins, JJ.)
I. INTRODUCTION
This case arises from a foreclosure proceeding. On
August 10, 2022, Petitioner/Defendant-Appellant Blaine T. Yata
(Yata) filed an application for writ of certiorari challenging
the Intermediate Court of Appeals’ (ICA) July 11, 2022 Judgment
on Appeal entered pursuant to its June 9, 2022 Summary
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Disposition Order. The ICA affirmed the Circuit Court of the
Fifth Circuit’s (circuit court) July 19, 2018 Order Granting
Motion for Summary Judgment and November 1, 2018 Order Denying
Motion for Reconsideration.
On or about March 24, 2006, Yata executed a note and
mortgage to New Century Mortgage Corporation, and the mortgage
was later assigned to Respondent/Plaintiff-Appellee Deutsche
Bank National Trust Company, as Trustee for Morgan Stanley ABS
Capital I Inc. Trust 2006-NC4 (Deutsche Bank).1 After Yata
defaulted on the note, Deutsche Bank filed a complaint to
foreclose the mortgage. Deutsche Bank asserted that it was
entitled to possession of the note, which was endorsed in blank.
Deutsche Bank subsequently filed a Motion for Summary
Judgment, arguing it established all material allegations in the
complaint and there were no genuine issues of any material fact.
Attached to Deutsche Bank’s Motion for Summary Judgment was a
declaration, along with exhibits, purporting to demonstrate
Deutsche Bank’s possession of the note when the complaint was
filed. The circuit court granted Deutsche Bank’s Motion for
Summary Judgment. Yata filed a Motion for Reconsideration,
arguing that Deutsche Bank failed to establish its standing to
foreclose as required by this court’s decision in Bank of Am.,
1 Deutsche Bank’s parent company is Deutsche Bank National Trust Company.
2
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
N.A. v. Reyes-Toledo, 139 Hawaiʻi 361, 390 P.3d 1248 (2017).
Deutsche Bank opposed Yata’s Motion for Reconsideration by
filing another declaration purporting to establish Deutsche
Bank’s possession of the note when the complaint was filed. The
circuit court denied Yata’s Motion for Reconsideration.
Yata appealed and the ICA affirmed the circuit court’s
Order Granting Motion for Summary Judgment and Order Denying
Motion for Reconsideration. The ICA determined that, pursuant
to this court’s decision in U.S. Bank Tr., N.A. as Tr. for LSF9
Master Participation Tr. v. Verhagen, 149 Hawaiʻi 315, 489 P.3d
at 419 (2021), as amended (July 6, 2021), reconsideration
denied, No. SCWC-17-000746, 2021 WL 2948836 (Haw. July 9, 2021),
Deutsche Bank produced sufficient evidence to establish its
standing to foreclose.
On certiorari, Yata asserts that the ICA grievously
erred by misinterpreting Verhagen. Yata argues that there was
no “admissible documentary evidence” demonstrating Deutsche Bank
had possession of the note when it filed the complaint. Yata’s
argument appears to have merit because the ICA misapplied
Verhagen in determining that Deutsche Bank’s documents were
admissible. Moreover, even if the documents were admissible,
those documents did not establish that Deutsche Bank had
possession of the note when it filed the complaint. Thus,
Deutsche Bank did not establish it had standing to foreclose.
3
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Accordingly, we vacate the ICA’s July 11, 2022
Judgment on Appeal, which affirmed the circuit court’s Order
Granting Motion for Summary Judgment and Order Denying Motion
for Reconsideration.
II. BACKGROUND
A. Factual Background
On or about March 24, 2006, Yata executed an
“Adjustable Rate Balloon Note” (the Note) to New Century
Mortgage Corporation. That same day, to secure the Note, Yata
signed and delivered a mortgage (the Mortgage), which encumbered
property located on the Island of Kauaʻi (the mortgaged
property), to New Century Mortgage Corporation. On August 25,
2008, the Mortgage was assigned to Deutsche Bank (the
Assignment).
B. Circuit Court Proceedings2
1. Deutsche Bank’s Complaint
On September 10, 2014, Deutsche Bank filed a
“Complaint to Foreclose Mortgage” (the Complaint).3 Deutsche
Bank alleged that it had standing to bring the Complaint as the
current holder of the Note, that it was entitled to possession
of the Note, and that the Note was endorsed in blank. Deutsche
2 The Honorable Randal G.B. Valenciano presided.
3 Deutsche Bank attached as exhibits to its Complaint, inter alia, a copy
of the Note, a copy of the Mortgage, and a copy of the Assignment.
4
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Bank maintained that Yata defaulted on the payment of the
principal and interest on the Note as of March 1, 2010.
Deutsche Bank asserted that it was entitled to foreclosure on
the Mortgage and to a sale of the mortgaged property.
On November 24, 2014, Yata filed a pro se answer to
the Complaint and requested that the Complaint be dismissed with
prejudice.
2. Deutsche Bank’s Motion for Summary Judgment
Nearly four years later, on April 17, 2018, Deutsche
Bank filed a Motion for Summary Judgment and for Interlocutory
Decree of Foreclosure (Motion for Summary Judgment). Deutsche
Bank argued that it was entitled to foreclose the Mortgage
because it established all material allegations in the Complaint
and there was no genuine issue of any material fact. Deutsche
Bank attached a declaration from Matthew Mountes (Mountes
Declaration) to its Motion for Summary Judgment.4 As relevant
here, the Mountes Declaration provided:
1. I am authorized to sign this declaration on
behalf of [Deutsche Bank], as an officer or employee of
Specialized Loan Servicing LLC (“SLS”), which is [Deutsche
Bank]’s loan servicing agent (“servicer”) for the subject
loan (“the Loan”).
2. The information in this declaration is taken
from SLS’s business records. I have personal knowledge of
SLS’s procedures for creating these records. They are:
(a) made at or near the time of the occurrence of the
4 Attached to the Mountes Declaration were true and correct copies of:
(1) the Note and the Allonges; (2) the Mortgage; (3) the Loan Modification
Agreement; (4) the Assignment; (5) the notice sent to Yata regarding the
default; (6) the Payment History for the Loan; (7) a printout that shows Yata
defaulted on the Loan, the default has was not cured, and the amount owed;
and (8) a Certification of Possession of Original Promissory Note.
5
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
matters recorded by persons with personal knowledge of the
information in the business record, or from information
transmitted by persons with personal knowledge; (b) kept in
the course of SLS’s regularly conducted business
activities; and (c) it is the regular practice of SLS to
make such records.
3. The owner of the Note and Mortgage for a
particular a [sic] mortgage loan is commonly referred to in
the loan servicing industry as the Investor. The Investor
for this mortgage loan is [Deutsche Bank].
4. SLS maintains all the day to day loan
documents, records and accounting of payments on the Loan
being foreclosed in this action including all documents and
business records acquired by [Deutsche Bank] when it
purchased the subject mortgage loan.
5. Under the terms of SLS’s servicing arrangement,
[Deutsche Bank] does not participate in, keep and maintain
any of the day to day loan documents, inputting of
accounting data, saving of business records and all
communications with borrowers.
6. [Deutsche Bank] as the Investor, has a passive
role with the primary emphasis on tracking its return on
investment. In terms of routine business records on the
Loan, SLS acts as the sole custodian of [Deutsche Bank]’s
records.
7. Based upon my occupational experience, I know
that loan servicers follow an industry wide standard on how
to keep and maintain business records on the loan services
performed in their portfolio which recordkeeping is part of
the regularly conducted activity of loan servicers. The
type of and regular maintenance of loan information
including the accounting under generally accepted
principles for each mortgage loan is standard and
computerized.
. . . .
11. Finally, the loan servicer records, maintains
and takes custody of all such daily business records and
all loan documents, including taking possession of the note
and mortgage records on behalf of the Investor.
12. A portion of the business records for the loan
in this matter were created by a prior servicer, the prior
servicer’s records for the loan were integrated and boarded
into SLS’s systems, such that the prior servicer’s records
concerning the Loan are now part of SLS’s business records.
SLS maintains quality control and verification procedures
as part of the boarding process to ensure the accuracy of
the boarded records. It is the regular business practice
of SLS to integrate prior servicers’ records into SLS’s
business records, and to rely upon the accuracy of those
boarded records in providing its loan servicing functions.
These prior servicer records are integrated and relied upon
by SLS as part of SLS’s business records. True and correct
copies of records I have reviewed and relied upon in
executing this affidavit are attached to this affidavit and
incorporated herein.
6
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
13. SLS became [Deutsche Bank]’s loan servicer for
the Loan being foreclosed in this action on November 1,
2016. The prior loan servicers for this mortgage loan were
America’s Servicing Company and Wells Fargo Bank, N.A.
. . . .
15. [Deutsche Bank], directly or through an agent,
has possession of the Note. The Note has been duly
endorsed in blank. [Deutsche Bank] is the assignee of the
security instrument for the subject loan. [Deutsche Bank]
has the right to foreclose the subject note and mortgage.
. . . .
28. At the time the foreclosure Complaint was filed
in this case, [Deutsche Bank], directly or through an
agent, was in possession of the Note. A true and correct
copy of the “Certification of Possession of Original
Promissory Note” is attached hereto as Exhibit “8”.
The circuit court orally granted Deutsche Bank’s
Motion for Summary Judgment, which was unopposed, at a hearing
on June 26, 2018.5
3. The Circuit Court’s Findings of Fact and Conclusions
of Law and Judgment
On July 19, 2018, the circuit court issued “Findings
of Fact; Conclusions of Law; Order Granting Plaintiff’s Motion
for Summary Judgment as Against All Defendants and for
Interlocutory Decree of Foreclosure” (Order Granting Motion for
Summary Judgment).6 The circuit court noted that Deutsche Bank
appeared at the hearing on the Motion for Summary Judgment, and
Yata did not appear.
5 Yata’s counsel appeared at a previous hearing on the Motion for Summary
Judgment on May 24, 2018, noted “he was retained last Friday,” and requested
“a continuance to file an opposition.” The circuit court set a continued
hearing for June 26, 2018. Yata’s counsel did not file an opposition or
appear at the June 26, 2018 continued hearing.
6 That same day, the circuit court issued its corresponding Judgment.
7
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
The circuit court found, inter alia, that (1) the
Mortgage was assigned to Deutsche Bank on August 25, 2008,
(2) Yata defaulted on the Note, and (3) Deutsche Bank was the
owner and holder of the Note and Mortgage. The circuit court
granted the Motion for Summary Judgment, concluding that
Deutsche Bank was entitled to a foreclosure on the Mortgage and
to a judgment as a matter of law on the Complaint.
4. Yata’s Motion for Reconsideration
Yata had previously filed a “Motion for Rehearing
and/or Reconsideration of this Court’s Decision Granting
‘Plaintiff’s Motion for Summary Judgment as Against All
Defendants and for Interlocutory Decree of Foreclosure’” (Motion
for Reconsideration) on July 3, 2018.
Citing to Reyes-Toledo and Hawaiʻi Revised Statutes
(HRS) §§ 490:3-201 and 490:3-301, Yata maintained that Deutsche
Bank did not offer admissible evidence that it possessed the
Note when the Complaint was filed.7 Yata contended that the
Mountes Declaration, which was attached to Deutsche Bank’s
Motion for Summary Judgment, contained inadmissible hearsay and
did not establish Deutsche Bank’s standing. Citing to Hawaiʻi
Rules of Evidence (HRE) Rule 602 and U.S. Bank N.A. v. Mattos,
140 Hawaiʻi 26, 398 P.3d 615 (2017), Yata maintained that
7 Yata pointed out that Deutsche Bank presented the circuit court with a
purported copy of the Note and an allonge stamped with an endorsement.
8
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Mountes’ testimony was based on his review of SLS’s business
records, which failed to demonstrate “the requisite element of
personal knowledge with respect to Wells Fargo’s business
records, especially [Deutsche Bank]’s purported possession of
the original note at the time the Complaint was filed, or ever.”
Yata asserted that Mountes never saw the original Note or
witnessed the Note in Deutsche Bank’s possession. Yata
maintained that Mountes instead relied on “his review of a copy
of an unverified ‘certificate’ (Exhibit 8 to [the Motion for
Summary Judgment]), wherein an individual named Patrick A.
Timmers alleges that Wells Fargo had possession of the original
note on December 18, 2013.” Yata argued that Deutsche Bank did
not demonstrate who possessed the Note when the Complaint was
filed on September 10, 2014.
In addition, Yata noted that Mountes stated he
reviewed Deutsche Bank’s “business records and files related to
the mortgage loan herein, including the purported copy of the
‘Certification of Possession of Original Promissory Note’ signed
by Timmers on December 18, 2013” (the Certification). According
to Yata, Mountes’ review of the Certification from a prior loan
servicer did not establish Mountes’ personal knowledge that
Deutsche Bank possessed the original Note. Yata thus argued
that Mountes’ testimony was inadmissible double hearsay.
9
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Yata asserted that Mountes’ statement and the
Certification were “not admissible under the business records
exception to the hearsay rule,” which can only be satisfied if
“the business record referred to by the testifying witness was
produced, is offered as evidence, and meets the necessary
criteria under HRE Rule 803(b)(6),[8] and is authenticated by a
qualified witness in accordance with HRE Rule 901 or 902(11).”
Yata also contended that Mountes’ statement, based on his review
of the Certification, was not a business record. Yata
maintained that even if Mountes could properly authenticate
business records from the prior servicer, Wells Fargo, the
business records did not demonstrate that Deutsche Bank
possessed the Note when it filed the Complaint.
8 Hawaiʻi Rules of Evidence Rule 803(b)(6) (2002) provides:
The following are not excluded by the hearsay rule,
even though the declarant is available as a witness:
. . . .
(b) Other exceptions.
. . . .
(6) Records of regularly conduced activity. A
memorandum, report, record, or data compilation, in any
form, acts, events, conditions, opinions, or diagnoses,
made in the course of a regularly conducted activity, at or
near the time of the acts, events, conditions, opinions, or
diagnoses, as shown by the testimony of the custodian or
other qualified witness, or by certification that complies
with rule 902(11) or a statute permitting certification,
unless the sources of information or other circumstances
indicate lack of trustworthiness.
10
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
According to Yata, Deutsche Bank only produced a copy
of the purported Note and the Certification, which was signed by
Timmers before the Complaint was filed in 2013. Yata maintained
that HRE Rule 803(b)(6) only admits records of regularly
conducted activity and the Certification was “not a verified and
trustworthy record of regularly conducted activity.” Yata
argued that the Certification was “clearly a document that was
prepared in anticipation of litigation, which is inadmissible.”
Yata maintained that Deutsche Bank “failed to produce any
admissible evidence demonstrating” it possessed or was entitled
to enforce the Note when the Complaint was filed, and thus
Deutsche Bank did not establish its standing to foreclose the
Mortgage.
a. Deutsche Bank’s Supplemental Opposition
On September 21, 2018, Deutsche Bank filed a
supplemental memorandum in opposition to Yata’s Motion for
Reconsideration.9 Attached to Deutsche Bank’s supplemental
memorandum was a “Declaration Regarding Location of the Note”
9 Deutsche Bank previously filed a memorandum in opposition to Yata’s
Motion for Reconsideration on July 27, 2018. Deutsche Bank contended that
the Motion for Reconsideration should be denied because Yata did not “present
new evidence or arguments that could not have been presented during the
earlier adjudicated” Motion for Summary Judgment. In support of this
argument, Deutsche Bank noted that Yata’s counsel appeared at the May 24,
2018 Motion for Summary Judgment hearing and requested a continuance to file
an opposition, but at the June 26, 2018 continued hearing, Yata or his
counsel did not appear and no opposition had been filed.
11
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
from Mark McCloskey (the McCloskey Declaration).10 As relevant
here, the McCloskey Declaration provided:
1. I am authorized to sign this declaration on
behalf of [Deutsche Bank], as an officer or employee of
Specialized Loan Servicing LLC (“SLS”), which is [Deutsche
Bank]’s loan servicing agent (“servicer”) for the subject
loan (“the Loan”).
2. The information in this declaration is taken
from SLS’s business records. I have personal knowledge of
SLS’s procedures for creating these records. They are:
(a) made at or near the time of the occurrence of the
matters recorded by persons with personal knowledge of the
information in the business record, or from information
transmitted by persons with personal knowledge; (b) kept in
the course of SLS’s regularly conducted business
activities; and (c) it is the regular practice of SLS to
make such records. I am familiar with SLS’s record-keeping
system.
3. The owner of the Note and Mortgage for a
particular a [sic] mortgage loan is commonly referred to in
the loan servicing industry as the Investor. The Investor
for this mortgage loan is [Deutsche Bank].
4. SLS maintains all the day to day loan
documents, records and accounting of payments on the Loan
being foreclosed in this action including all documents and
business records acquired by [Deutsche Bank] when it
purchased the subject loan.
5. Under the terms of SLS’s servicing arrangement,
[Deutsche Bank] does not participate in, keep and maintain
any of the day to day loan documents, inputting of
accounting data, saving of business records and all
communications with borrowers.
6. [Deutsche Bank], as the Investor, has a passive
role with the primary emphasis on tracking its return on
investment. In terms of routine business records on the
Loan, SLS acts as the sole custodian of [Deutsche Bank]’s
records. [Deutsche Bank]’s records were received by SLS
and incorporated into SLS’s records. SLS relies upon the
accuracy of these records in providing its loan servicing
functions. [Deutsche Bank]’s records are relied upon by
SLS as part of SLS’s business records. I am familiar with
the record-keeping system of [Deutsche Bank].
7. Based upon my occupational experience, I know
that loan servicers follow an industry wide standard on how
to keep and maintain business records on the loan services
performed in their portfolio which record-keeping is part
of the regularly conducted activity of loan servicers. The
type of and regular maintenance of loan information
10 Deutsche Bank’s counsel also submitted a declaration which stated that
counsel would bring the original endorsed Note to the October 2, 2018 Motion
for Reconsideration hearing. It appears Deutsche Bank’s counsel did not
bring the original endorsed Note to the hearing.
12
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
including the accounting under generally accepted
principles for each mortgage loan is standard and
computerized.
. . . .
11. Finally, the loan servicer records, maintains
and takes custody of all such daily business records and
all loan documents, including taking possession of the note
and mortgage records on behalf of the Investor.
12. A portion of the business records for the loan
in this matter were created by a prior servicer, the prior
servicer’s records for the loan were integrated and boarded
into SLS’s systems, such that the prior servicer’s records
concerning the Loan are now part of SLS’s business records.
SLS maintains quality control and verification procedures
as part of the boarding process to ensure the accuracy of
the boarded records. It is the regular business practice
of SLS to integrate prior servicers’ records into SLS’s
business records, and to rely upon the accuracy of those
boarded records in providing its loan servicing functions.
These prior servicer records are integrated and relied upon
by SLS as part of SLS’s business records. I am familiar
with the record-keeping systems that prior servicers used
to create and record information related to residential
mortgage loans that it serviced, including the process by
which information was entered into those systems and how
those records were maintained. True and correct copies of
records I have reviewed and relied upon in executing this
affidavit are attached to this affidavit and incorporated
herein.
13. On or about March 24, 2006, Defendant BLAINE T.
YATA executed a promissory note (“Note”) in the amount of
$420,000.00. A true and correct copy of the endorsed Note
and the Allonges are attached hereto as Exhibit “1”.
14. At the time the foreclosure Complaint was filed
on September 10, 2014, [Deutsche Bank], through its
custodian Deutsche Bank National Trust Company, was in
possession of the Note. The Note was kept by the custodian
at 1761 E. St. Andrew Place, Santa Ana, CA 92705 on behalf
of [Deutsche Bank]. The original date of possession of the
Note by the custodian was April 4, 2006. The Note had been
returned to the custodian on December 27, 2013. The
custodian maintained possession of the Note until May 8,
2015. A true and correct copy of the documentation
supporting Note possession at the time of the filing of the
Complaint is attached hereto as Exhibit “2”.
15. The Note, which is endorsed in blank, is
currently being held by Law Offices of Marvin S.C. Dang,
LLLC for [Deutsche Bank].
b. Yata’s Reply
On September 27, 2018, Yata filed a reply to Deutsche
Bank’s supplemental memorandum in opposition to the Motion for
13
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Reconsideration. Yata noted the McCloskey Declaration claimed
that Deutsche Bank was in possession of the Note when the
Complaint was filed on September 10, 2014. Yata argued that
such statement was inadmissible hearsay. Yata contended that
even if Deutsche Bank possessed the Note when the Complaint was
filed, the McCloskey Declaration did not offer evidence
demonstrating that the Note was endorsed at that time.
Yata argued that Deutsche Bank attempted “to invoke
the business records exception to the hearsay rule” by
presenting “a document marked as Exhibit 2,” which were
screenshots allegedly demonstrating Deutsche Bank’s possession
of the Note when the Complaint was filed.
Yata contended that the McCloskey Declaration lacked
the necessary foundation to admit Exhibit 2 into evidence. Yata
further contended that
Although [McCloskey] claims that Exhibit “2” is the record
he relied upon to determine that [Deutsche Bank] was the
holder of the note at the time the complaint was filed, it
is impossible for any reasonable person viewing the
document to reach the same conclusion. McCloskey offers no
explanation as to what any of the items of that document
mean, or when, where, why, and how those alleged entries
were made. McClosk[e]y does not even point to a single
entry on that document that purports to evidence [Deutsche
Bank]’s possession of the indorsed promissory note.
Without any such foundational testimony from McClsok[e]y,
Exhibit “2” offered as a business record for the purpose of
demonstrating [Deutsche Bank]’s possession of the note at
the time the Complaint was filed, lacks trustworthiness.
Nowhere does that document even reference the subject
mortgage note. Nor is there any testimony as to when
Exhibit “2” was generated. The document itself is dated
August 29, 2018, long after the Complaint was filed herein.
As such, Exhibit “2”, lacking foundation and
14
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
trustworthiness, is not admissible under the business
records exception to the hearsay rule.
Thus, Yata maintained that his Motion for Reconsideration should
be granted because Deutsche Bank did not establish its standing.
c. The Circuit Court’s Order
On November 1, 2018, the circuit court issued an Order
Denying Motion for Reconsideration, concluding that Deutsche
Bank possessed the Note when the Complaint was filed.
C. ICA Proceedings
1. Opening Brief
On November 30, 2018, Yata filed a notice of appeal.
Yata filed an opening brief on April 10, 2019. Yata raised one
point of error on appeal, arguing that Deutsche Bank did not
establish its standing to foreclose and thus the circuit court
erroneously granted Deutsche Bank’s Motion for Summary Judgment
and erroneously denied Yata’s Motion for Reconsideration. Yata
repeated the arguments he made before the circuit court in his
Motion for Reconsideration and reply to Deutsche Bank’s
supplemental memorandum in opposition to Yata’s Motion for
Reconsideration.
2. Answering Brief
Deutsche Bank filed an answering brief on June 19,
2019. Deutsche Bank contended that the circuit court properly
granted “the Motion for Summary Judgment because the Note was
15
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
endorsed prior to the filing of the Complaint and Plaintiff was
in possession.”11
Deutsche Bank pointed out that the Mountes Declaration
was signed by Mountes, a Second Assistant Vice President at SLS,
Deutsche Bank’s loan servicer. Deutsche Bank noted that the
Mountes Declaration states that Deutsche Bank, directly or
through an agent, possessed the Note when the Complaint was
filed.
According to Deutsche Bank, the instant case is
distinguishable from Reyes-Toledo. Deutsche Bank argued that in
this case, “the blank indorsement of the Note occurred prior to
the initiation of the suit.” Deutsche Bank noted that “[t]he
endorsed Note was attached to the Complaint.” Deutsche Bank
asserted that it possessed the Note, “through its custodian
Deutsche Bank National Trust Company,” when it filed the
Complaint. Deutsche Bank thus contended that it had standing to
foreclose when the Complaint was filed.
Deutsche Bank further argued that the circuit court
properly denied Yata’s Motion for Reconsideration. Deutsche
Bank repeated the arguments it made in the memorandum in
opposition to Yata’s Motion for Reconsideration. In addition,
Deutsche Bank noted that the McCloskey Declaration stated:
11 Deutsche Bank also argued that Yata’s appeal should be dismissed
pursuant to Hawaiʻi Rules of Appellate Procedure Rules 28 and 30.
16
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
14. At the time the foreclosure Complaint was filed on
September 10, 2014, [Deutsche Bank], through its custodian
Deutsche Bank National Trust Company, was in possession of
the Note. The Note was kept by the custodian at 1761 E.
St. Andrew Place, Santa Ana, CA 92705 on behalf of
Plaintiff. The original date of possession of the Note by
the custodian was April 4, 2006. The Note had been
returned to the custodian on December 27, 2013. The
custodian maintained possession of the Note until May 8,
2015. A true and correct copy of the documentation
supporting Note possession at the time of the filing of the
Complaint is attached hereto as Exhibit “2.”
According to Deutsche Bank, Exhibit 2 supports the information
in paragraph 14 of the McCloskey Declaration. Deutsche Bank
asserted that its custodian, Deutsche Bank National Trust
Company, possessed “the Note from December 27, 2013 until May 8,
2015” and thus Deutsche Bank possessed the Note when the
Complaint was filed.
Citing to State v. Fitzwater, 122 Hawaiʻi 354, 365-68,
227 P.3d 520, 531-34 (2010), as amended (Apr. 5 2010), Deutsche
Bank maintained that the McCloskey Declaration laid a sufficient
foundation and the business records attached to the McCloskey
Declaration were admissible under HRE Rule 803(b)(6). Deutsche
Bank also contended that Yata did not “provide any specific
facts showing that the records in question are unreliable and
untrustworthy.”
3. ICA Summary Disposition Order
The ICA issued a Summary Disposition Order on June 9,
2022. As an initial matter, the ICA pointed out that a hearing
on the Motion for Summary Judgment was set for May 24, 2018,
17
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
where Yata’s counsel requested a continuance to file an
opposition. The ICA noted that no opposition to the Motion for
Summary Judgment was filed, and neither Yata nor his counsel
appeared at the June 26, 2018 continued hearing. The ICA
determined that “to the extent that Yata contends – based on
hearsay objections that were not raised in response to the
Motion for Summary Judgment – that the Circuit Court erred in
entering the [Order Granting Motion for Summary
Judgment] . . . , Yata’s arguments are without merit” because
those objections were waived.12
The ICA went on to note that the circuit court
considered the issue of standing at the Motion for
Reconsideration stage. Citing to this court’s decision in
Verhagen, the ICA determined that
Here, with the Motion for Summary Judgment, Deutsche
Bank submitted, inter alia, a declaration of Matthew
Mountes (Mountes), Second Assistant Vice President of
Specialized Loan Servicing LLC (SLS), loan servicer for
Deutsche Bank; and in conjunction with its response to the
Motion for Reconsideration, Deutsche Bank submitted, inter
alia, a declaration of Mark McCloskey (McCloskey),
Assistant Vice President of SLS, both attesting to their
personal review and knowledge of SLS’s records, including
incorporated records. With careful consideration of the
supreme court’s directives in Verhagen, and upon review of
the evidence presented by Deutsche Bank, we conclude that
Mountes and McCloskey were qualified witnesses with
personal knowledge of SLS’s procedures for creating its
12 Although the ICA did not err when it concluded that Yata’s argument was
meritless based on waiver, this court will address Yata’s arguments on
certiorari because Deutsche Bank did not raise a waiver argument, the circuit
court addressed the Motion for Reconsideration’s substantive issues, and the
ICA discussed U.S. Bank Tr., N.A. as Tr. for LSF9 Master Participation Tr. v.
Verhagen, 149 Hawaiʻi 315, 489 P.3d 419 (2021), as amended (July 6, 2021),
reconsideration denied, No. SCWC-XX-XXXXXXX, 2021 WL 2948836 (Haw. July 9,
2021) when affirming the circuit court.
18
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
records, including its procedures for incorporation of
records of other businesses into SLS’s records, and SLS’s
reliance on those records and maintenance of those records
in the course of its regularly-conducted business
activities, after a pre-incorporation process of quality
control and verification procedures. Although indicia of
trustworthiness are not profuse, we conclude that the
record provides sufficient indicia of trustworthiness,
including with respect to the evidence that the Note was in
the possession of Deutsche Bank, through its custodian
Deutsche Bank National Trust Company, at the time the
foreclosure complaint was filed. Thus, we conclude that
the Circuit Court did not err or abuse its discretion in
denying the Motion for Reconsideration and rejecting Yata’s
argument that Deutsche Bank did not have standing to
foreclose on the subject property.
Thus, the ICA affirmed the circuit court’s Order Granting Motion
for Summary Judgment and Order Denying Motion for
Reconsideration. The ICA issued its corresponding Judgment on
Appeal on July 11, 2022.
D. Application for Writ of Certiorari
Yata filed a timely application for writ of certiorari
on August 10, 2022. Yata asserts that the ICA erroneously
interpreted this court’s decision in Verhagen for two reasons.
First, Yata argues that the ICA erroneously held that
Deutsche Bank established it had possession of the Note when the
Complaint was filed because (a) there was no “admissible
documentary evidence” of possession, and (b) Deutsche Bank did
not demonstrate how it was connected to the custodian, Deutsche
Bank National Trust Company.13
13 Yata maintains that “a parent corporation and its wholly-owned
subsidiary are separate and distinct legal entities” and standing must be
proven by Deutsche Bank rather than Deutsche Bank’s parent company.
19
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Yata argues that the instant case is distinguishable
from Verhagen. Yata contends that the Mountes and McCloskey
Declarations contain conclusory statements regarding possession
of the Note at the time the Complaint was filed. According to
Yata, the only documentary evidence that Deutsche Bank possessed
the Note was Exhibit 2 to the McCloskey Declaration. Yata
maintains that Exhibit 2 is an inadmissible screenshot. Citing
to Wells Fargo Bank, N.A. v. Fong, 149 Hawaiʻi 249, 488 P.3d 1228
(2021), Yata asserts that “the screenshot is not self-
explanatory and McCloskey’s statements about what this shows are
conclusory.” Yata maintains that the McCloskey Declaration does
not state “what entity the screenshot belongs to, and whether
[McCloskey] is familiar with the record-keeping of the entity.”
Yata contends that Exhibit 2 refers to a custodian “but does not
state where the Note is.” Yata asserts that the screenshots
were not admissible documentary evidence pursuant to Verhagen.
Second, Yata maintains that the ICA erroneously held
that the “qualified witness” doctrine applied to the screenshots
because “(a) Deutsche Bank National Trust Company was not the
lender or a prior loan servicer, and (b) it was not shown what
entity created or maintained the screenshot.”
Yata argues that the ICA did not analyze the three
factors, which were set forth in Verhagen and Wells Fargo Bank,
N.A. v. Behrendt, 142 Hawaiʻi 37, 414 P.3d 89 (2018), to
20
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
determine “whether [Mountes and McCloskey] were qualified
witnesses.” Yata contends that although McCloskey states that
SLS received and incorporated business records into SLS’s
records, McCloskey “does not make this statement for the
screenshot attached as Exhibit 2 to his declaration.” Yata
maintains that “stating what a screenshot is without
authenticating the screenshot does not meet the admissibility
requirements for such evidence.”
Citing to Verhagen, Yata contends that the McCloskey
Declaration does not explain McCloskey’s familiarity “with the
record-keeping system that produced the screenshot” or “state
how an SLS employee would have knowledge of the records of
Deutsche Bank National Trust Company.” According to Yata,
Deutsche Bank’s only evidence of possession of the Note was “a
screenshot that purports to show that Deutsche Bank National
Trust Company had possession of the Note” when the Complaint was
filed. Yata reiterates that Deutsche Bank did not explain how
it was related to Deutsche Bank National Trust Company and the
only documentary evidence showing Deutsche Bank possessed the
Note when the Complaint was filed was an inadmissible
screenshot.14
14 Deutsche Bank did not file a response.
21
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
III. DISCUSSION
A. Yata correctly argues that Deutsche Bank failed to
establish standing.
Yata largely cites to this court’s decision in
Verhagen15 in support of his argument that Deutsche Bank lacked
standing because Deutsche Bank did not prove it had possession
of the Note at the time it filed the Complaint. Specifically,
Yata maintains that Deutsche Bank did not produce “admissible
documentary evidence” that it had possession of the Note when
the Complaint was filed, and that screenshots submitted by
Deutsche Bank were inadmissible under the “qualified witness”
doctrine.
In Verhagen, Patrick Verhagen (Verhagen) owned real
estate (the Property) and executed a note, secured by a mortgage
on the Property, in favor of Washington Mutual. Verhagen, 149
Hawaiʻi at 317, 489 P.3d at 421. The mortgage was assigned to
U.S. Bank. Id. Caliber Home Loans, Inc. (Caliber) was U.S.
Bank’s loan servicer, and JPMorgan Chase previously serviced the
loan. Id. at 317-18, 489 P.3d at 421-22.
15 The briefing in this appeal was completed in 2019 and this court’s
decision in Verhagen was published in 2021. Consequently, the parties did
not cite to Verhagen in the briefings before the ICA. However, the ICA
relied on Verhagen in its Summary Disposition Order to affirm the circuit
court’s Order Granting Motion for Summary Judgment and Order Denying Motion
for Reconsideration. Thus, Verhagen is relevant to the instant application
for writ of certiorari.
22
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
After Verhagen defaulted on the note, U.S Bank filed a
foreclosure complaint in the Circuit Court of the Second
Circuit, and attached a Verification by Caliber employee Julia
Jackson. Id. at 318, 489 P.3d at 422. Jackson was familiar
with Caliber’s records and how those records were maintained,
and verified U.S. Bank possessed the original note. Id.
U.S. Bank subsequently filed a Motion for Summary
Judgment and Interlocutory Decree of Foreclosure (MSJ). Id.
U.S. Bank supported its MSJ with a declaration from Alyssa
Salyers, a foreclosure document specialist at Caliber (Salyers
Declaration). Id. In the Salyers Declaration,
Salyers declared she was familiar with both Caliber’s
business records concerning the Note and the manner in
which Caliber maintains those records. Salyers also
declared she had inspected a copy of the Note maintained by
Caliber. She attached a “true and correct” copy of the
Note to her declaration. She further declared that
Caliber’s records concerning the Note include records
incorporated from the prior loan servicer, JPMorgan Chase.
The records obtained from JPMorgan Chase, Salyers,
declared, are “kept and maintained by Caliber in the
ordinary course of its business for the purpose of
maintaining an accounting of payments received, expenses
incurred, and amounts advanced with regard to the Subject
Loan, and such records are relied upon by Caliber in the
regular course of its business.”
Id. Verhagen filed an opposition to U.S. Bank’s MSJ, contending
that “U.S. Bank could not establish standing under [Reyes-
Toledo].” Id. The circuit court disagreed and granted U.S.
Bank’s MSJ. Id.
After Verhagen appealed, the ICA remanded the case so
U.S. Bank could “supplement the record in light of Reyes-Toledo
23
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
and [Mattos].” Id. (footnote omitted). Then, “[o]n remand, U.S
Bank moved for ratification of the circuit court’s prior
judgment.” Id. at 319, 489 P.3d at 423. Verhagen raised
jurisdictional objections “but did not substantively oppose the
motion to ratify.” Id. U.S. Bank’s motion to ratify was
accompanied by a supplemental declaration from Melinda
Patterson, a Caliber employee (Patterson Declaration). Id.
Patterson stated she “was familiar with both Caliber’s books and
records concerning the Note and the manner in which Caliber
maintains its books and records.” Id. The Patterson
Declaration further provided:
Caliber’s records include and incorporate records for
the Loan obtained from [JPMorgan Chase] (“Prior Servicer”),
the prior loan servicer for the Loan. The records obtained
by Caliber from the Prior Servicer are kept and maintained
by Caliber in the ordinary course of its business for the
purpose of maintaining an accounting of payment received,
expenses incurred, and amounts advanced with regard to the
Loan, and such records are relied upon by Caliber in the
regular course of its business. The information regarding
the Loan transferred to Caliber from the Prior Servicer has
been validated in many ways, including but not limited to,
going through a due diligence phase, review of hard copy
documents, and review of the payment history and accounting
of other fees, costs, and expenses charged to the Loan by
Prior Servicer. It is Caliber’s regular practice, after
these phases are complete, to receive records from prior
servicers and integrate these records into Caliber’s
business records at the time of acquisition. Once
integrated, Caliber maintains and relies on these business
records in the ordinary course of its mortgage loan
servicing business.
Id. (brackets in original).
Patterson also declared that U.S. Bank possessed the
note when it filed its complaint against Verhagen:
24
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
Plaintiff, or its agent on Plaintiff’s behalf, was in
possession of the original wet-ink, indorsed in blank Note
when the above-captioned foreclosure action was commenced
on March 23, 2016 and since [that time] . . . .
My personal knowledge of these statements is derived
from my having inspected Caliber’s business records.
Specifically, I researched Calber’s business records, which
includes “Certification” [sic] executed by Caliber
employee, Jennifer Martin. The “Certification” contained
in Caliber’s business records evidence [sic] that the
original wet ink, indorsed in blank Note was in Caliber’s
possession on Plaintiff’s behalf on February 9, 2016.
Further, the “Certification” contained in Caliber’s
business records indicates that the original wet-ink Note
was indorsed in blank no later than February 9, 2016, as
the original wet-ink Note was electronically scanned and
uploaded to Caliber’s business records on or before
February 9, 2016, and the scanned copy of the original wet-
ink Note that was uploaded to Caliber’s business records on
or before February 9, 2016 contains a blank indorsement on
page 6 of the Note.
Id. (brackets in original). Jennifer Martin’s certification was
attached to the Patterson Declaration. Id. In addition,
Patterson declared that there was a December 9, 2016 attorney’s
bailee letter agreement in Caliber’s business records, and “that
Caliber sent the letter to U.S. Bank’s legal counsel on or
around that date along with the wet-ink indorsed-in-blank Note.”
Id. at 319-20, 489 P.3d at 423-24 (footnote omitted).
The circuit court issued amended findings of fact and
conclusions of law, finding that U.S. Bank possessed the note
when it filed the complaint. Id. at 320, 489 P.3d at 424.
However, the ICA issued an amended summary disposition order
vacating the circuit court’s amended findings of fact and
conclusions of law. Id. at 321, 489 P.3d at 425. The ICA
determined U.S. Bank did not demonstrate it possessed the note
when the complaint was filed and thus lacked standing. Id.
25
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
(citation omitted). U.S. Bank filed an application for writ of
certiorari. Id. at 323, 489 P.3d at 427. This court concluded
that U.S. Bank had standing as required by Reyes-Toledo, vacated
the ICA’s amended summary disposition order, and affirmed the
circuit court’s granting of U.S. Bank’s MSJ. Id. at 328, 489
P.3d at 432.
As discussed below, the instant case is
distinguishable from Verhagen, and Deutsche Bank did not
demonstrate it had possession of the Note when it filed the
Complaint.
1. Deutsche Bank’s documentary evidence was inadmissible
because there was insufficient testimony regarding
circumstances of trustworthiness.
Yata correctly argues that Deutsche Bank’s documentary
evidence that it possessed the Note was inadmissible. Unlike
the records in Verhagen, Deutsche Bank’s records were
inadmissible under HRE Rule 803(b)(6) because the Mountes and
McCloskey Declarations did not sufficiently demonstrate
circumstances of trustworthiness.
In Verhagen, this court pointed out that “HRE Rule
803(b)(6) establishes a hearsay exception for ‘records of
regularly conducted activity.’” Id. at 325, 489 P.3d at 429
(quoting HRE Rule 803(b)(6)). This court stated that “when an
entity incorporates records prepared by another entity into its
own records, they are admissible as business records of the
26
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
incorporating entity provided that it relies on the records,
there are other indicia of reliability, and the requirements of
HRE Rule 803(b)(6) are otherwise satisfied.” Id. (quoting
Fitzwater, 122 Hawaiʻi 354, 367-68, 227 P.3d 520, 533-34).
This court noted when “it is appropriate to treat an
incorporated record as ‘created’ by the receiving business:”
Incorporated records are admissible under HRE Rule
803(b)(6) when a custodian or qualified witness testifies
that [1] the documents were incorporated and kept in the
normal course of business, [2] that the incorporating
business typically relies upon the accuracy of the contents
of the documents, and [3] the circumstances otherwise
indicate the trustworthiness of the document.
Id. at 325-26, 489 P.3d at 429-30 (quoting Behrendt, 142 Hawaiʻi
at 45, 414 P.3d at 97) (brackets in original). This court
further noted that an incorporated record is admissible even
without testimony concerning its actual creation if the three
conditions are satisfied. Id. at 326, 489 P.3d at 430.
As applied to the facts in Verhagen, this court
determined that the first two requirements were satisfied:
Patterson and Salyers both testified that JPMorgan
Chase’s records were incorporated into Caliber’s own and
kept and maintained by Caliber in the ordinary course of
its business. They both further testified that Caliber
used and relied on the incorporated records in the regular
course of its loan servicing business. The first two
requirements for the admission of incorporated records are
thus satisfied.
Id. (footnote omitted).
With respect to the third requirement, this court
noted that Salyers did not testify about circumstances
27
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
indicating “the trustworthiness of the documents Caliber
incorporated from JPMorgan Chase” but Patterson did because
“Patterson declared that:”
The information regarding the Loan transferred to
Caliber from the Prior Servicer has been validated in many
ways, including, but not limited to, going through a due
diligence phase, review of hard copy documents, and review
of the payment history and accounting of other fees, costs,
and expenses charged to the Loan by Prior Servicer.
Id. This court determined that:
Though scant, this testimony establishes
circumstances indicating the trustworthiness of Caliber’s
incorporated records. It is evidence that before
incorporating JPMorgan Chase’s documents, Caliber reviewed
hard copies of the documents, engaged in a “due diligence”
process, and reviewed the payment history and accounting
associated with the loan. JPMorgan Chase’s documents were
not, in other words, uncritically incorporated into
Caliber’s own. They were vetted by Caliber. This pre-
incorporation vetting, however nebulously described by
Patterson’s testimony, is a circumstance that indicates the
trustworthiness of the documents.
Id. This court concluded that Patterson’s testimony satisfied
the three Behrendt requirements and “[t]he ICA should have held
that Caliber’s incorporated records, as authenticated by Salyers
and Patterson’s testimony, were admissible under HRE Rule
803(b)(6).” Id. at 327, 489 P.3d at 431 (footnote omitted).
Here, like the declarations in Verhagen, the Mountes
and McCloskey Declarations satisfy the first two Behrendt
requirements.16 Both declarations stated that some of the
16 In addition, Mountes and McCloskey were qualified witnesses because
they had knowledge of SLS’s record-keeping system and described SLS’s
incorporation of prior loan servicer’s documents. See Verhagen, 149 Hawaiʻi
at 327 n.8, 489 P.3d at 430 n.8 (citing State v. Fitzwater, 122 Hawaiʻi 354,
366, 227 P.3d 520, 532 (2010), as amended (Apr. 5, 2010) (“The phrase ‘other
qualified witness’ is given a very broad interpretation. The witness need
28
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
business records regarding Yata’s loan were “created by a prior
servicer” and “were integrated and boarded into SLS’s systems,
such that the prior servicer’s records concerning the Loan are
now part of SLS’s records.” Both declarations further stated
that
It is the regular business practice of SLS to integrate
prior servicers’ records into SLS’s business records, and
to rely upon the accuracy of those boarded records in
providing its loan servicing functions. These prior
servicer records are integrated and relied upon by SLS as
part of SLS’s business records.
In addition, McCloskey stated he was “familiar with the record-
keeping systems that prior servicers used to create and record
information related to residential mortgage loans that it
serviced, including the process by which information was entered
into those systems and how those records were maintained.” The
Mountes and McCloskey Declarations demonstrate that SLS
“incorporated and kept the documents in the normal course of
business” and “typically relies upon the accuracy of the
contents of the documents,” and “[t]he first two requirements
for admission of incorporated records are thus satisfied.” Id.
at 326, 489 P.3d at 430 (citing Behrendt, 142 Hawaiʻi at 45, 414
P.3d at 97).
only have enough familiarity with the record-keeping system of the business
in question to explain how the record came into existence in the ordinary
course of business.”) (cleaned up)).
29
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
However, the Mountes and McCloskey Declarations do not
provide sufficient “circumstances [that] indicate the
trustworthiness of the documents.” Id. With regard to
circumstances indicating trustworthiness, the Mountes and
McCloskey Declarations state that “SLS maintains quality control
and verification procedures as part of the boarding process to
ensure the accuracy of the boarded records.” The declarations
in Verhagen provided specific methods of validation of documents
from the prior loan servicer, “including, but not limited to,
going through a due diligence phase, review of hard copy
documents, and review of the payment history and account of
other fees, costs, and expenses charged to the Loan by Prior
Servicer.” Id. The Mountes and McCloskey Declarations merely
assert that SLS has “quality control and verification
procedures” to ensure the accuracy of incorporated records
without stating what those procedures are. This court noted
that the testimony indicating circumstances of trustworthiness
in Verhagen was “scant” and “nebulously described” circumstances
of trustworthiness. Id. Here, there is even less testimony
describing circumstances of trustworthiness. Thus, it appears
that the third Behrendt requirement was not satisfied, and the
documents attached to the Mountes and McCloskey Declarations
were not admissible. See id. at 327, 489 P.3d at 431.
30
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
2. Even if Deutsche Bank’s documentary evidence was
admissible, that documentary evidence was insufficient
to establish Deutsche Bank’s possession of the Note
when it filed the Complaint.
In Verhagen, this court determined that “[t]he
evidence, taken together, shows U.S. Bank had standing at the
time it filed suit.” Id. This court noted that “a foreclosing
plaintiff must establish its standing to bring a lawsuit at the
commencement of the proceeding, not merely at the summary
judgment stage.”17 Id. (citing Reyes-Toledo, 139 Hawaiʻi at 369,
390 P.3d at 1256). This court pointed out that:
U.S. Bank maintains that, at the time it initiated
suit, it was entitled to enforce the Note because it held
the indorsed-in-blank Note. U.S. Bank supports this claim
with the following evidence: (1) Jennifer Martin’s February
9, 2016, certification certifying, under penalty of
perjury, that at 12:51 p.m. on February 9, 2016, she
personally verified Caliber’s possession of the original
Note and attaching an indorsed-in-blank copy of the Note;
(2) a bailee letter dated December 9, 2016, establishing
that Caliber sent the Note to U.S. Bank’s counsel at that
time; and (3) Patterson’s sworn testimony that, based on
her review of Caliber’s records, and her knowledge of how
those records are made and maintained in the ordinary
17 This court pointed out that “the requirement of standing overlaps with
a plaintiff’s burden of proving its entitlement to enforce the subject
promissory note. Verhagen, 149 Hawaiʻi at 327, 489 P.3d at 431 (citing Bank
of Am., N.A. v. Reyes-Toledo, 139 Hawaiʻi 361, 367, 390 P.3d 1248, 1254
(2017)). This court noted that “[w]hether a party is entitled to enforce a
promissory note is determined by application of [Hawaiʻi Revised Statutes]
§ 490:3-301, which provides:
“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 section 490:3-309 or 490:3-418(d). A person
may be a person entitled to enforce the instrument even
though the person is not the owner of the instrument or is
in wrongful possession of the instrument.
Id. at 327, 489 P.3d at 431.
31
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
course of business, “Plaintiff, or its agent on Plaintiff’s
behalf, was in possession of the original wet-ink, indorsed
in blank Note when the [Verhagen] foreclosure action was
commenced on March 23, 2016, and since.”
Id. (bracketing in original) (emphasis added). This court then
determined:
. . . Patterson testified that based on her knowledge
of Caliber’s records and record-keeping practices, U.S.
Bank had actual or constructive possession of the Note at
the time it filed the complaint. Such testimony, standing
alone and uncorroborated by documentary evidence, would be
insufficient to establish U.S. Bank possessed the Note when
it filed the complaint. Here, however, there is admissible
documentary evidence showing that U.S. Bank possessed the
Note both a mere six weeks before the filing of the
complaint and at the time of summary judgment.
Collectively, the evidence presented by U.S. Bank thus
establishes the bank’s possession of the Note on the day
the complaint was filed.[18]
Id. at 327-28, 489 P.3d at 431-32 (footnote omitted) (emphasis
added).
Here, in contrast to Verhagen, the Certification
attached as Exhibit 8 to the Mountes Declaration was dated
December 18, 2013, nearly nine months before the Complaint was
filed on September 10, 2014. The Verhagen court concluded that
U.S. Bank established possession of the note on the day the
complaint was filed partly because the certification in that
case “predates the filing of the complaint by less than two
18 This court went on to note that “a defendant may counter this inference
of possession at the time of filing with evidence setting forth ‘specific
facts showing that there is a genuine issue’ as to whether the plaintiff
actually possessed the subject note at the time it filed suit.” Verhagen,
149 Hawaiʻi at 328, 489 P.3d at 432 (citation omitted). However, Yata did not
need to counter an inference of possession because Deutsche Bank failed to
produce sufficient evidence of possession of the Note when it filed the
Complaint.
32
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
months.” Id. at 328 n.10, 489 P.3d at 432 n.10. This court
further noted that “[a]n older certification, and a
correspondingly larger gap between the certification’s date and
that of the complaint, would leave more room for a ‘genuine
issue’ as to whether U.S. Bank actually possessed the Note when
it sued Verhagen.” Id. As discussed above, the Certification
in this case predates the filing of the complaint by nearly nine
months, which is significantly more than two months. Thus,
there is more potential for a “genuine issue” as to whether
Deutsche Bank possessed the Note when it filed the Complaint
against Yata. See id.
In addition, Yata correctly contends that the
screenshots attached as Exhibit 2 to the McCloskey Declaration
are unclear and do not establish Deutsche Bank’s possession of
the Note when it filed the Complaint. The McCloskey Declaration
does not explain where the screenshots came from or how to
interpret the screenshots. Without such an explanation, it is
unclear how the screenshots demonstrate that Deutsche Bank had
possession of the Note when it filed the Complaint.
Furthermore, in Verhagen, this court took into
consideration U.S. Bank’s possession of the note at the time of
summary judgment when determining if U.S. Bank had standing.
Id. at 328, 489 P.3d at 432. Here, the only evidence Deutsche
Bank possessed the Note at the time of or after summary judgment
33
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
was a declaration from Deutsche Bank’s counsel, which stated
that “[t]he Note, which is endorsed in blank, is currently being
held by Law Offices of Marvin S.C. Dang, LLLC for Plaintiff.”
This declaration further stated that Deutsche Bank’s counsel
would “bring the original endorsed Note to the hearing on
October 2, 2018.” Deutsche Bank’s counsel did not bring the
original endorsed Note to the hearing. In contrast to Verhagen,
there was no bailee letter demonstrating SLS sent the Note to
Deutsche Bank’s counsel after Deutsche Bank filed its Complaint,
see id. at 327, 489 P.3d at 431, and there was no documentary
evidence demonstrating Deutsche Bank had possession of the Note
after it filed the Complaint.
In sum, there was more potential for a genuine issue
regarding whether Deutsche Bank had possession of the Note when
it filed the Complaint because the Certification predates the
filing of the Complaint by more than two months, the screenshot
was unclear and did not establish Deutsche Bank’s possession of
the Note before or after it filed the Complaint, and the only
evidence Deutsche Bank possessed the Note after the Complaint
was filed was Deutsche Bank’s counsel’s conclusory declaration.
Even if Deutsche Bank’s documents were admissible, there is less
evidence in this case demonstrating Deutsche Bank’s possession
of the Note when it filed the Complaint than in Verhagen. Thus,
it appears that Deutsche Bank lacked standing to foreclose
34
*** NOT FOR PUBLICATION IN WEST’S HAWAII REPORTS AND PACIFIC REPORTER ***
against Yata because Deutsche Bank did not establish it
possessed the Note when it filed the Complaint.
IV. CONCLUSION
For the foregoing reasons, Deutsche Bank failed to
establish standing when it filed the Complaint. Thus, we vacate
the ICA’s July 11, 2022 Judgment on Appeal, which affirmed the
circuit court’s Order Granting Motion for Summary Judgment and
Order Denying Motion for Reconsideration. The case is remanded
to the circuit court for proceedings consistent with this
opinion.
DATED: Honolulu, Hawaiʻi, February 22, 2023.
Keith M. Kiuchi /s/ Mark E. Recktenwald
for petitioner
/s/ Paula A. Nakayama
Marvin S.C. Dang
and Amy Jackson /s/ Sabrina S. McKenna
for respondent
/s/ Michael D. Wilson
/s/ Todd W. Eddins
35