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Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
16-NOV-2023
09:06 AM
Dkt. 70 SO
NO. CAAP-XX-XXXXXXX
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAIʻI
HSBC BANK USA, NATIONAL ASSOCIATION FOR THE BENEFIT OF ACE
SECURITIES CORP. HOME EQUITY LOAN TRUST, SERIES 2006-NC3,
ASSET BACKED PASS-THROUGH CERTIFICATES, Plaintiff-Appellee, v.
MARK CORBA also known as MARK ALAN CORBA also known as
MARK-ALLAN: CORBA also known as MARK-ALLAN: CORBA;
MARK-ALLAN: CORBA, AS TRUSTEE OF THE MARK CORBA TRUST,
A PRIVATE CONSTRUCTIVE IRREVOCABLE TRUST
DATED OCTOBER 14, 2010; Defendant-Appellant,
USAA FEDERAL SAVINGS BANK; DESIGN & BUILD SERVICES, INC.;
CHUTIPA SRIJAN; Defendants-Appellees, and
JOHN AND MARY DOES 1-20; DOE PARTNERSHIPS,
CORPORATIONS OR ENTITIES 1-20, Defendants.
APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT
(CASE NO. 2CC171000508(1))
SUMMARY DISPOSITION ORDER
(By: Ginoza, Chief Judge, Wadsworth and McCullen, JJ.)
Defendant-Appellant Mark Corba 1 appeals from the
Circuit Court of the Second Circuit's October 6, 2020 Judgment
1 The caption reads: "Mark Corba a.k.a Mark Alan Corba a.k.a Mark-
Allan: Corba a.k.a. Mark-Allan: Corba; Mark-Allan: Corba, as Trustee of the
Mark Corba Trust, a private constructive Irrevocable Trust dated October 14,
2010[.]" (Formatting altered.)
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and "Findings of Fact; Conclusions of Law; Order Granting
Plaintiff's Motion for Summary Judgment, and for Interlocutory
Decree of Foreclosure Against All Parties Filed January 14,
2020." 2
On appeal, Corba asserts that the circuit court erred
by granting Plaintiff-Appellee HSBC Bank USA, National
Association for the Benefit of Ace Securities Corp. Home Equity
Loan Trust, Series 2006-NC3, Asset Backed Pass-Through
Certificates' (HSBC) January 14, 2020 Motion for Summary
Judgment, and for Interlocutory Decree of Foreclosure Against
All Parties. 3
Specifically, Corba contends that HSBC failed to
establish standing, admissibility of its business
records, adequate cancellation notice, and Select Portfolio
Servicing's (SPS) Document Control Officer Mark Syphus (Syphus)
as a qualified witness. Corba also contends the circuit court
erred in declining to allow him to withdraw his automatic
admissions.
2 The Honorable Rhonda I.L. Loo presided.
3 Corba did not preserve for appeal his arguments concerning New
Century's bankruptcy, when Select Portfolio Servicing (SPS) obtained
possession of the loan records, and the date the Note was indorsed. See
Cnty. of Hawaiʻi v. C & J Coupe Fam. Ltd. P'ship, 119 Hawaiʻi 352, 373, 198
P.3d 615, 636 (2008) (explaining that "if a party does not raise an argument
at trial, that argument will be deemed to have been waived on appeal").
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Upon careful review of the record and the briefs
submitted by the parties, and having given due consideration to
the issues raised and the arguments advanced by the parties, we
resolve Corba's contentions as follows, and vacate and remand.
Regarding his challenge to HSBC's standing to
foreclose, Corba argues that the entity that allegedly had
physical possession of the Note at the time the complaint was
filed, Deutsche Bank, was unrelated to HSBC, and HSBC provides
no proof of a custodial-agency relationship between HSBC and
Deutsche Bank.
At the outset, we emphasize that "[i]n order to prove
entitlement to foreclose, the foreclosing party must demonstrate
that all conditions precedent to foreclose under the note and
mortgage are satisfied and that all steps required by statute
have been strictly complied with." Bank of Am., N.A. v. Reyes-
Toledo, 139 Hawaiʻi 361, 367, 390 P.3d 1248, 1254 (2017). Thus,
the foreclosing party must "prove the existence of an agreement,
the terms of the agreement, a default by the mortgagor under the
terms of the agreement, and giving of the cancellation notice."
Id.
To establish standing to foreclose, a "plaintiff must
necessarily prove its entitlement to enforce the note[.]"
Reyes-Toledo, 139 Hawai‘i at 368, 390 P.3d at 1255. When a note
is indorsed in blank, it becomes payable to the bearer and may
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be negotiated by transfer or possession alone. Id. at 370, 390
P.3d at 1257. Thus, when a lender forecloses on a mortgage
secured by a blank-indorsed note, the lender must establish that
it held the note at the time it filed the complaint. See id.
A foreclosing party may establish it is the holder of
a note by showing that its agent physically possesses it. See
e.g., U.S. Bank Tr., N.A. as Tr. for LSF9 Master Participation
Tr. v. Verhagen, 149 Hawai‘i 315, 327-28, 489 P.3d 419, 431-32
(2021). There must be evidence connecting the custodial agent
with the principal. Cf., e.g., Bank of New York Mellon as Tr.
for Certificate-Holders CWABS Asset-Backed Notes Tr. 2006-SD4 v.
Bautista, 153 Hawai‘i 280, 534 P.3d 544, No. CAAP-XX-XXXXXXX,
2023 WL 4546454 at *8 (App. July 14, 2023) (am. mem. op.)
(concluding that bailee letter from law office to third-party
was insufficient to establish possession of note by the lender's
agent in absence of any supporting evidence connecting the
bailee or third-party to the lender, servicer, or lender's
counsel).
In his declaration, Syphus stated that he is an
officer of SPS, HSBC's servicer for the subject loan. Syphus
further stated, "According to SPS's business records, [HSBC],
through its custodian Deutsche Bank, has possession of the note
in this instant action . . . and was in possession of the Note
at the time of the filing of the complaint."
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Syphus then stated, "A true and correct copy of the
documentation supporting note possession at the time of the
filing of the complaint is attached as Exhibit '4' . . . ."
Exhibit 4 appears to contain an entry prepared by "Jaren French,
[SPS]" indicating that Deutsche Bank "[i]s the custodian in
possession of the [N]ote" and that the Note was physically
located in Santa Ana, California.
However, there is nothing in Exhibit 4 to show that
Deutsche Bank possessed the Note as the custodial agent for HSBC
or to otherwise show a connection between HSBC, Deutsche Bank,
and the Note. And HSBC does not point to any other evidence in
the record to support Syphus' assertion.
The two words - "its custodian" - in Syphus'
declaration, "standing alone and uncorroborated by documentary
evidence," were insufficient to show there was no genuine issue
as to whether Deutsche Bank was HSBC's custodial agent and that
HSBC was entitled to a judgment as a matter of law. See
Verhagen, 149 Hawai‘i at 327, 489 P.3d at 431 (explaining that
the declarant testified "U.S. Bank had actual or constructive
possession of the Note at the time it filed the complaint," and
that "[s]uch testimony, standing alone and uncorroborated by
documentary evidence, would be insufficient to establish U.S.
Bank possessed the Note when it filed the complaint"). Thus,
the circuit court erred in granting HSBC's motion for summary
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judgment. U.S. Bank N.A. v. Mattos, 140 Hawaiʻi 26, 30, 398 P.3d
615, 619 (2017) (reviewing the granting of summary judgment de
novo).
Based on the foregoing, this court need not reach
Corba's remaining contentions. We vacate the circuit court's
October 6, 2020 Judgment, and remand for further proceedings
consistent with this summary disposition order.
DATED: Honolulu, Hawaiʻi, November 16, 2023.
On the briefs: /s/ Lisa M. Ginoza
Chief Judge
Keith M. Kiuchi,
for Defendant-Appellant. /s/ Clyde J. Wadsworth
Associate Judge
Patricia J. McHenry,
Lisa K. Swartzfager, /s/ Sonja M.P. McCullen
(Cades Schutte), Associate Judge
for Plaintiff-Appellee.
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